According to Knight Frank, India is anticipated to confront a significant housing shortfall, primarily due to funding challenges within the construction industry.
Housing shortage will be one of the biggest problems India will have to deal with.
Knight Frank India's recent study, "Economy and Realty @ Glance," proposes Real Estate Investment Trusts (REITs) as a key solution to address the housing shortage. This report emphasizes the current housing deficit within India, advocating for the REIT model to effectively bridge this gap.
Knight Frank India emphasizes that REITs can provide the real estate sector with vital funding for projects. Developers encounter funding as a notable obstacle, which REITs are poised to mitigate successfully.
According to "Economy and Realty @ Glance," the urban population is projected to reach approximately 600 million by 2031, representing an increase of over 200 million in two decades. This substantial population growth is anticipated to place significant burden on the social and economic infrastructure.
Housing shortage is going to be severe in India
The population increase in cities will have severe consequences on the housing sector. Statistics from 2012 indicate that around 94.98 million individuals reside in slums across India's major cities.
To address the housing needs of this population, the government initiated the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), a housing initiative aimed at providing affordable homes to economically disadvantaged communities. Nevertheless, this project is slated to construct approximately 1.6 million homes in the next seven years.
This figure underscores the acuteness of the housing shortage. Should current trends persist, India is poised to experience a substantial deficit in housing units within the foreseeable future.
The real estate sector is currently grappling with inadequate funding avenues and dwindling foreign investment. Adding to existing challenges, there has also been a noticeable decline in NRI investments in the real estate market.
As a solution to resolve these funding issues, Knight Frank recommends REITs, enabling the construction industry to secure the necessary capital for construction and property development endeavors.