The entry of large corporates and consolidation have led to the expansion of the Indian property market with the value of real estate under construction jumping over two-fold to USD 243 billion in the last one decade, according to a report by FICCI and Anarock.
The expansion of the property market was largely driven by the residential segment.
Property consultant Anarock and industry body FICCI pointed out that the number of developers has declined 53 per cent across India's top 14 cities between 2012-2019.
"The Indian real estate sector has been undergoing constant metamorphosis since the turn of the century. This transition has been for the better and the accomplishments so far have been remarkable. The results are quite visible today as the sector has become better organised, compliant, accountable, and transparent compared to what it was during the last decade of the 20th century," the report said.
The sector saw a slew of structural reforms and policy changes which led to the elimination of weaker players, large-scale consolidation, and entry of large corporate houses, it added.
"Until 2008, the real estate business was highly unregulated and more of a localised play. It was a sellers' market and was driven by the landlords who had become developers overnight to take advantage of the boom in the sector.
"Until the Global Financial Crisis hit in 2008, funding was readily available, and many developers went overboard in leveraging their assets. As a result, the sector was operating with several inefficiencies," the report said.
However, Anarock said several corporate houses made inroads into the real estate sector between 2008 and 2015, even as the sector continued to remain unregulated.
"The entry of large players led to an expansion of the overall market and imparted pressure on the government to intervene and change the face of the sector that was growing in an unstructured manner.
"The value of real estate under construction increased from USD 94 billion in 2009 to USD 243 billion as on H1 2020, a 2.6X increase. During the same period, the share of housing (residential) grew from 49 per cent to 88 per cent indicating large-scale expansion witnessed in this segment," the report said.
Anarock Chairman Anuj Puri said the housing segment is set to undergo a momentary phase of trouble due to the coronavirus pandemic but would emerge stronger in the post-COVID world.
He listed out various factors that would drive the growth of the residential segment.
"The real estate business is better structured and organised today due to a series of structural reforms and policy changes. Housing prices have been range-bound for the past 7-8 years indicating that with a rise in demand it may spiral upwards," Puri said.
"Home loan interest rates are at their decadal lows of 6.85 per cent. Amid stagnant prices and declining home loan rates, affordability is all-time best. Branded and corporate developers dominate and are being largely preferred by homebuyers," he added.
That apart, Puri said the government has been supportive and has come up with a slew of measures to support the real estate sector - the second-highest employment generator and a key contributor to the nation's GDP.