🔑Key Growth Factors and Challenges of the Real Estate Industry

Issues and challenges in real estate sector

a) Issues faced by customers:

• Delay in Projects: The major problem consumer facing is delay of projects which may happen due to various reasons like court intervention in land issues, finance, approval etc. The consumer had to suffer because customer is paying rent where resides and paying EMI for home loan at same time due to delay of projects.

• Further there is little or no provision for necessary compensation from side of government.

• Fraudulent advertisement to sell product is quite popular and frequent in real estate. The main reason for flourishing fraudulent methods is absence of any regulator and standard guidelines.

• Further builders pay only 2 to 3% interest in case of default from their side but when customers default (like refuses to buy) then they have to pay around 16 to 18% which is unfair.

b) Issues faced by Real Estate Industry

The key challenges that the Indian real estate industry is facing today are:

• Approvals and Procedural difficulties: There are almost 50 approvals or more need to be taken for starting a real estate project and further these approvals are required form different govt departments or authorities. This is one of the major causes of delays and high amount of corruption in real estate sector. Consequently, corruption and delay cause inconvenience to customers only.

• Lack of clear land titles: The land titles are not clear because of poor record keeping and division of land in many parts till independence. The slow pace of modernization of land records is further aggravating the problem.

• Speculation in Land and Real Estate Prices: The prices of land and real estate in India has increased exponentially in last decade and causes overpricing of commercial or residential property. In recent times, the real estate is the most favorable destination for investment in India and far ahead than equity or gold. Further real estate agents or brokers buy or sell property frequently with their own investments and cause of surging prices in property.

• Sources of Finance: Finance is the key for development of any industry. Due to poor image of Real Estate sector, banks are becoming reluctant to provide loans and making regulation tougher to avoid the bad loans. Alternate sources of finance are very costly and ultimately impact total cost of the project.

• High Input Cost: The real estate is a capital and labor intensive industry; thus rise in cost of labour and construction material due to inflation poses many problems to real estate industry. Further real estate builders many times raise a question about unfair practices in cement industry for rise of price more than 50% in quick time.

• Further government intervention of building minimum 20% affordable housing putting extra burden on developers and ultimately on the rest 80%.

• Real estate is the most famous sector for soaking the black money without any ambit.]

• High taxation like stamp duty, VAT etc. and land acquisition are other major challenges faced by real estate sector.

All the above issues can be verified by the facts that more than 30% of houses and commercial spaces are lying vacant in major cities like Mumbai or Delhi despite being so much demand in real estate sector. Thus, to handle the above issues government of India has launched Real Estate Bill. It seeks to regulate contracts between buyers and sellers in the real authorities at the state level to register residential real estate projects. …

estate sector to ensure consumer protection, and standardization of business practices. It establishes regulatory