India’s growth landscape is multifaceted, with urbanization standing out as a pivotal aspect of this evolution. Within rapidly advancing economies, cities emerge as vital generators of investment and employment that, in turn, propel the overall growth dynamic. The sustainability and liveability of any urban environment hinges significantly on the robustness of its infrastructure and the quality of its real estate offerings. It’s clear that creating a strong urban asset portfolio, which includes buildings and essential infrastructure, demands substantial financial resources.
Over the past decade, India has experienced an 18% increase in population, while the urban demographic surged by nearly twice that rate, hitting an impressive 32% growth. As a result, approximately 31.2% of the nation's populace resides in urban settings, witnessing a notable rise of around 3.5% in the urban population over the last ten years. What is particularly remarkable is the substantial expansion in real estate stock within cities and towns.
Data derived from the 2001 census indicates the existence of about 110 million 'Census Houses' across urban regions, marking an increase of 39 million dwellings over the last decade. This translates to a compounded growth rate of 4.5% per annum in real estate stock versus a 2.8% rise in the urban population. Such significant growth certainly necessitates corresponding investments in infrastructure.
Nevertheless, the current state of infrastructure in Indian cities remains concerning. Many urban areas grapple with ongoing challenges related to roads, public transportation, sanitation, stormwater drainage, and solid waste management. As the quantity of real estate continues its relentless ascent, fundamental needs such as energy and water supply for urban India face critical shortages.
While the private sector plays a dominant role in bolstering real estate stock, the onus of infrastructure development predominantly resides with public sector entities, including Urban Local Bodies (ULBs) and various utility companies, many of which are government-operated. The trend in investments affirms this division – the private sector primarily channels funds into real estate development, whereas the public sector largely handles infrastructure enhancements.
The scale of investments for most infrastructure initiatives is substantial, yet the responsible agencies often find themselves severely under-financed. Their funding relies heavily on domestic grants, like the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), or through bilateral and multilateral agency financing. In some situations, funds may also be acquired from private sources via Public Private Partnerships. However, the private sector typically hesitates to invest heavily in city-level infrastructure projects, as they are perceived as non-lucrative ventures, preferring instead to concentrate on real estate development.
Mumbai, heralded as India’s financial heart, attracts significant funds, predominantly within the real estate domain. The city symbolizes exorbitant real estate pricing and land scarcity, yet substantial capital continually seeks land opportunities, while the enhancement of infrastructure lags considerably behind.