Better infrastructure is key to the growth of real estate sector
After a brief slowdown (last year) the real estate sector is showing signs of recovery. But the path of recovery will not be smooth! In order to maintain a sustainable growth, the sector needs to be amply supported bythe stakeholders concerned, by enabling the necessary infrastructure.
China isa living example for us! Its better infrastructure has augmented the growth of real estate to another level. If we want to see India in a prominent spot on the world real estate map, then our focus should be on the development of the infrastructure.
To achieve sustenance towards the growth of real estate industry, infrastructure has toplay the role of key catalyst. But before that there are some issues, which have to be addressed immediately to demolish the negative sentiments that are hampering the growth of infrastructure.
Some of the key issues related to infrastructure development:
Funding and financing for infrastructure: Urgent need for government and developer partnership
It is a fact that the demand of homebuyers primarily depends on available infrastructure. It includes ease of accessibilityand also the essential utility services along with social infrastructure, such as access to schools, shopping, healthcare facilities, entertainment etc.
It wouldn’t be possible for the developer alone to fund and finance the entire infrastructure for the area. This is where the government (local) should step in and help the developer in establishing the same. But before that the government has to create an environment, which is conducive for participation by the developers as well.
Infrastructure Maintenance: Plan for the long term
Creating infrastructure is only first step, the most important thing is maintenance of the same or else it will be a wasteful attempt. It is essential to develop a fool-proof mechanism, which ensures maintenance and operation (of infrastructure) in the long term. Ironically the existing system hardly addresses this issue because of which many of big projects have faced roadblocks.
Thus government has to devise a plan to take care of infrastructure from long-term perspective. One of the ways toaddress this issue isto have a national monitoring committee, which includes bureaucrats, industrialists, eminent citizens, NGOs, architects, urban planners etc to look into the bottlenecks and provide solution for the same.
Focus on basic infrastructure: Improving the quality of public transport&social infrastructure
Infrastructure is not all about multilane roads and huge bridges, it also entails basic amenities for day to day activities.There is no point of in building roads and bridges if the common man can’t use them because of poor public transport system. Similarly the focus should also be on creating sufficient social infrastructure such as schools, healthcare centers, police stations, park, parking slots etc.
Hence government should focus on improving the quality of existing models of public transport and generate adequate funds to create adequate social infrastructure to address the growing need of the same. This will eventually help the economy togrow faster.
Public Participation: Public’s willingness to pay for infrastructure will shape the future growth
Public participation is key to the growth of infrastructure for future. One of the points discussed extensively is infrastructure maintenance, which comes at a cost and the government cannot take the entire burden. It becomes inevitable for people to pay for the infrastructure, which they use. But that willingness to pay (by public) comes only when the common man see any benefits.
It is pertinent that government (local/state/centre) create awareness among the masses on the need for better infrastructure even if it means pay to use model.
Single Window clearance: Approval is key to the growth of infrastructure
The delay in granting approvals for various projects is the biggest hindrance for infrastructure development in the country. Today,a lot of infrastructure projects are stuck due to pending approvals, which have eventually impacted the real estate projects. A gradual development of infrastructure will boost the demand for residential and commercial projects which falls in periphery of the (infra) project.
The utmost priority of the government is to create a single window clearance model to ensure speedy clearance of the various infrastructure projects, which usually get entangled in the webof red-tape.
Stop cartels: Steps to control artificial price hike of raw materials for construction
Today the entire construction industry is marred by constant fluctuation in the prices of raw materials – cement, steel and sand, has impacted the growth of entire industry (construction). To weed out this problem, the government has to take stringent action against hoarders, black marketers and the sand mafia.
There should be a robust government mechanism, which can address such issues, or else cartels will be detrimental to the future of the construction sector.
Proactive measures: Steps to boost the confidence of the investors
The government has to take several initiatives to improve the infrastructureof various sectors. There should be more initiatives such as smart cities to draw investors. Also,the government should ensure that all the initiatives such as automatic approval of Foreign Direct Investment (in power sector), streamlining of land acquisition and environment clearance, dispute resolution, exit options for equity investors (for projects pertaining to road) etc are practiced to its core rather than only ornating the government gazettes.
The future of the real estate sector stands on the edifice of infrastructure, as it is the most essential pre-requisite when it comes to attracting investment. Hence, honest efforts from all the stakeholders are required to ensure the growth of the real estate sector, as government alone can’t meet the goal.