India's real estate market has been faltering for quite some time as the country's economy has remained under stress. But, now hopes are pinned on the new government. Various real estate stakeholders viz., stakeholders builders, investors, financial institutions, and private equity players are now hoping for improvement in this sector. An article in Mint states that, US$ 16 bn of the PE funds have got locked in hundreds of real estate projects. Not only that, the sector needs an infusion of another US$ 1 bn for completion of these projects. As this sector lacks regulations, even banks have shown less interest in investing in realty projects. Thus, large parts of the projects are now financed through PE players who charge phenomenal interest rates which increase the project costs. These instances have impacted the investors' wealth and thus they are now struggling to take an exit.
This sorry state of affairs in the Indian real estate calls for solid regulations in place. For the real estate sector to revive, the government should seek to streamline the processes. Only a structural change can attract serious, long-term capital. Having said that, one should also note that this is not going to be an overnight task. It will take some time for the government to improve the policy and guidelines which are in the best interest of all the real estate stakeholders.
This sorry state of affairs in the Indian real estate calls for solid regulations in place. For the real estate sector to revive, the government should seek to streamline the processes. Only a structural change can attract serious, long-term capital. Having said that, one should also note that this is not going to be an overnight task. It will take some time for the government to improve the policy and guidelines which are in the best interest of all the real estate stakeholders.
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