Development of Real Estate Market in Post-independent India

Sujan Afi S


Real Estate market refers to the market which deals with the buying or selling or renting real estate property, i.e., land or land with permanent improvements (buildings, house, trees, and water etc.). India has a heritage in the sector of real estate but many of those structures were destroyed by invaders (British, Afghans etc.). After Independence India has witnessed a lot of changes in many sectors, real estate market is one of them. Partition was a part of Independence. It instantly made people homeless and this affected the real estate market of India a lot. Post-independence, India experienced the abolition of Zamindari System. The Zamindari Abolition Act, 1950, was framed in aiming the abolition of zamindari system in India. The abolition of zamindari system created a lot of changes in the ownership of land which influenced the real estate market of India.

Keeping relationship with the high growth rate of population and urbanization, the real estate market also evolved simultaneously. Besides, the political stability also helped in the growth of real estate market in post-Independent India. Between the years 1950-1960, a number of new cities needed to be established (Chandigarh and Gandhinagar etc.) because lots of cities got demolished or separated from India after partition. The city of Chandigarh is recognized as the first planned city in post-independent India. The establishment of new cities like this helped in the growth of the real estate market of India at a fast pace. 

Several acts were framed in post-independent India for shaping the real estate market of India. The Maharashtra Regional and Town Planning Act, 1956 is the first real estate law of an Indian state. This gave a boost to the other Indian states to frame their own real estate laws. At that time, the government considered the housing sector as one of the prime area to be focused on; therefore, it gave major impetus to the real estate housing sector. Nevertheless, for a long period of time the housing sector remained as an unorganized sector. For the purpose of boosting residential real estate sector, the central government of India established a number of institutions, such as Housing and Urban Development Company in 1970, City & Industrial Development Corporation in 1971 and the National Housing Bank in 1988.

After 1990 the Indian economy and market have experienced the era of liberalization of economy and globalization. Post 1990, the real estate market of India experienced a great change keeping with the relationship of the liberalization of monetary policies and globalization. Liberalization of monetary policies can be considered as one of the most significant phases of reformation for Indian real estate sector. The entity of a large number of multinational companies (as a result of liberalization) created huge demand for commercial places as well as housing complexes. This lead the real estate market of India towards the creation of a large number of skyscrapers. All the big cities of India like Delhi, Kolkata, Mumbai, Chennai etc. experienced the coming up of a large number of skyscrapers with high architectural technological input. The foreign capital and NRI’s investment act as a booster for the growth of Indian real estate market. As a consequence, the real estate market of India experienced sharp growth rate.

The influx of IT companies gave the next boost to the real estate market of India after 1990. The IT industries gradually spread all over the major cities in India like Bengaluru, Hyderabad, Kolkata, Gurugram, Noida, Mumbai, Pune, Chennai, etc. A great demand of high-rise building is generated through the development of IT companies which promotes the growth of Indian RE market.

Since the year 2000 the mall concept of India got popularised in India. A number of malls and plaza were developed across various cities of India. The concept of organized retail shop was first introduced to the Indians by Spencer Plaza in Chennai which was inaugurated in the year 2000, followed by Ansal Plaza in Delhi. The growth of various malls across the major cities of India led to the high growth of real estate market in India.

In 2005, India allowed Foreign Direct Investment (FDI) which gave a boost to the development of real estate market. The allowance of FDI opened a new way of investment in various sector of Indian economy, including real estate sector. This indirectly helped the foreign developers to enter the real estate market of India.

The modernization of various brownfield airport of India like Mumbai, Bengaluru, and New Delhi was sanctioned in the year 2006. The development and modernization of airport was done through public-private partnership; it has led to the high increase to Indian real estate sector.

For the purpose of the promotion of small investors in the field of real estate, a Real Estate Investment trust (REIT) was set up in the year 2014. Besides, the Real Estate Regulation Act (RERA) came into force in the year 2017. This act (RERA) introduced a great change in real estate market of India which brought a major transformation and empowered the home buyers as well.

Quite recently, Indian government has taken a number of important decisions which have a positive effect on the real estate market of India. The government of India has announced Pradhan Mantri Awas Yojana (PMAY) to provide affordable housing and basic accommodation to the all Indians by the year 2022. In Union Budget of 2019, the government of India announced a deduction in the payment of interest of home loan. India has experienced a rapid growth of urbanization throughout the post-independence period. Keeping with the relationship of the rapid urbanization rate the real estate sector of India has also grown at a high rate. Therefore, it can be concluded that keeping in relationship with the high rate of development, the real estate sector of India has a great scope in future. Although Covid-19 has adversely affected the real estate sector of India but it is progressing still. We hope that you have got a clear picture about the development of real estate market in post-independent India.

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