India seems to be in a continual state of experiencing ‘growing pains’, and while businesses are flocking to setup headquarters within the nation, the real estate and property investment industry hasn’t moved in any comparably progressive manner. Real estate is a relatively immature industry for India, even in comparison to off-shore back office services where the number of service-centers have grown by exponential leaps over the past decade.
With one of the planet’s fastest growing economies, with nearly 650 million people, and considerable spending power, the country appears to be ideal for potential real estate investors. Couple this with an already present and quickly growing demand for housing, nearing 19 million new homes needed by 2021, it is reasonably easy to understand why an increasing number of investors are looking towards India. However, the young and struggling real estate industry is having a difficult time keeping up with the speed of current and potential business.
One of the main complaints expressed by property investors are concerning the comparably extreme amount of red tape and bureaucracy that must be traversed in order to complete any successful transaction. Not only is the red tape a deterring factor, but also questionable land title authority and transfer of ownership, which often leads to delays in paperwork and also construction.
There was a push to avoid or at the very least, nearly circumvent these problems by creating Special Economic Zones (SEZ) modeled after the ones implemented by the Chinese government. However, this strategy has been slowed by local protests from special interest groups and farmers. In the year 2,000 nearly 500 SEZs were proposed and at present only 220 of these 500 have been established.
In contrast to this point of view often held by investors, Senior Bharatiya Janata Party leader Murli Manohar Joshi stated that, “The real growth should move from bottom to top. Lakhs and Lakhs of rupees of the common man has been siphoned off by the illegal real estate agents.” It seems as though there exists a paradox where some believe that the government is too lax in their policy to allow foreign investment, while others believe that the government is in a poor position to truly streamline the real estate industry and fulfill the true potential of property investment in India.
