The sector which was largely unorganised fragmented and unregulated in the 1990’s has seen tremendous transformation. Relaxation in government regulations and liberalisation of the market has resulted in foreign funds investing in the sector. A large number of global private equity firms like Goldman Sachs, DSP Merrill Lynch, Morgan Stanley and JP Morgan
have started investing in the Indian real estate market. It is estimated that over $4- 5 billion of FDI was pumped into the sector during 2006, while during 2005-06, the bank credit to the sector touched Rs.2.60 trillion against Rs.1.45 trillion during the previous year. Streamlining of the regulatory framework has gone a long way in making the sector more transparent, thus making the environment more investor-friendly. Today, the Indian real estate sector has moved into the large corporate space by getting listed, forming credible JVs with large foreign partners. This capital infusion from legitimate sources has further led to the sector being organised and transparent.
Increasing exposure to international capital has also encouraged local firms to match international standards, thereby raising the bar for domestic players. The immediate beneficiary has of course been the Indian customer who gets the benefit of high quality products across a wide range. Also, this has helped in ‘corporatising’ the Indian real estate sector resulting in higher standard in accountability, performance, quality and on time project management. One can see significant improvements in market transparency, with better standards of reporting and legal processes.
Having said
that, I feel there is a lot more that can be done to ensure more accountability, transparency and discipline in the real estate industry. In order to help this sector gain more respect, a more focused and liberal approach & the right kind of impetus has to be given by the government. The government has to join hands with the private sector, as it can further catalyse growth. A more supportive attitude, sustained focus and relaxed fee structure would give the sector the much needed thrust.
have started investing in the Indian real estate market. It is estimated that over $4- 5 billion of FDI was pumped into the sector during 2006, while during 2005-06, the bank credit to the sector touched Rs.2.60 trillion against Rs.1.45 trillion during the previous year. Streamlining of the regulatory framework has gone a long way in making the sector more transparent, thus making the environment more investor-friendly. Today, the Indian real estate sector has moved into the large corporate space by getting listed, forming credible JVs with large foreign partners. This capital infusion from legitimate sources has further led to the sector being organised and transparent.Increasing exposure to international capital has also encouraged local firms to match international standards, thereby raising the bar for domestic players. The immediate beneficiary has of course been the Indian customer who gets the benefit of high quality products across a wide range. Also, this has helped in ‘corporatising’ the Indian real estate sector resulting in higher standard in accountability, performance, quality and on time project management. One can see significant improvements in market transparency, with better standards of reporting and legal processes.
Having said
that, I feel there is a lot more that can be done to ensure more accountability, transparency and discipline in the real estate industry. In order to help this sector gain more respect, a more focused and liberal approach & the right kind of impetus has to be given by the government. The government has to join hands with the private sector, as it can further catalyse growth. A more supportive attitude, sustained focus and relaxed fee structure would give the sector the much needed thrust.For Complete IIPM Article, Click here
Source: IIPM Editorial, 2008
An IIPM and Management Guru Prof. Arindam Chaudhuri's Initiative
