Economic Survey 2018: Real estate sector shows signs of improvement, receives FDI of $257m in first half of 2017

The strength of the Indian economy and favorable demographics, coupled with the introduction of several growth oriented reforms are aiding real estate sector to attract higher investments. Indian Real Estate sector has begun to show signs of improvement with the total FDI of USD 257 million in the first half of 2017, which is more than double the total FDI in 2016 full year, says the Economic Survey presented to both houses of Parliament during the Budget Session on Monday.

This positive sentiment was attributed to a host of factors including regulatory environment, enhanced infrastructure, and amendments to Real Estate Investment Trusts (REITs). These policy initiatives are expected to lead to higher transparency, accountability and make the sector better organised and structured, thereby increasing the investment, notes the Economic Survey.

Private equity investments in the real estate sector have also increased from US$ 0.9 billion in 2013 to over US$ 5.9 billion in 2016, recording more than six-fold jump during this period, it says.

Indian real estate has attracted institutional investments (excluding bank credit to commercial real estate) of over US$ 10.7 billion, since the beginning of 2016, which is more than half of the total investments witnessed since 2013.

Other highlights of the survey are:

Pradhan Mantri Awas Yojana

Some of the recent reforms and policies taken by the Government of India related to real estate sector include the Pradhan Mantri Awas Yojana (PMAY) with the government sanctioning over 3.1 million houses for the affordable housing segment in urban regions till November 2017. Of this, about 1.6 million houses have been grounded and are at various stages of construction, and about 0.4 million houses have been built under the mission.

PPP policy for affordable housing

PPP policy for affordable housing was also announced on 21st September 2017 for affordable housing segment to provide further impetus to the ambitious ‘Housing for all by 2022’ mission.

Credit-linked subsidy scheme (CLSS)

Credit Linked Subsidy Scheme (CLSS) under PMAY was extended to the Middle Income Group (MIG) segment, which got included in the scheme from 1st January 2017.

Real Estate (Regulation & Development) Act, 2016

With the enactment of Real Estate (Regulation & Development) Act, 2016, it is anticipated that accountability would lead to higher growth across the real estate value chain, while compulsory disclosures and registrations would ensure transparency.

Developers’ take

“The Economic Survey which was tabled on Monday ahead of the official announcement of the Union Budget on the 1st of February, 2018, proved to be highly informative and insightful. It provided the stakeholders with key insights into the future of the Indian economy. The survey also revealed the projected positive implications on the consumption demand that will be aided by low real estate. Indian realty is widely expected to play a decisive role in the country’s aim of becoming a $5 trillion economy by 2025, with the affordable housing segment right at the heart of it. The growth in supply and demand in the affordable housing segment catapulted the category which quickly became the flagship segment of the industry. With the added thrust from the Government in the form of reforms and initiatives, we expect its prominence to increase even further in the coming months and years,” says Jaxay Shah, president, Credai.

The Economic Survey is an annual publication of the Finance Ministry and is presented to both houses of Parliament during the Budget Session. It is a review of the developments in the country's economy over the previous one year. It presents a summary of the performance of the government's major development programmes undertaken during that period. It also details the main policy initiatives of the government.

Here is the Full Text of Economic Survey 2017-2018: