#EconomicSurvey: Performance Review Of Real Estate & Housing Sector

Finance Minister Arun Jaitley tabled the Economic Survey 2015-16 in Parliament today (February 26). The minister said that the economy was in a positive state and India would meet the fiscal deficit target of 3.9 per cent of the Gross Domestic Product (GDP). Though Jaitley said that the target for the current year seemed achievable, it was likely to be seen how the real estate industry will perform in the new fiscal year.

PropGuide brings you some of the key highlights from the Survey on how the real estate and housing sector has performed in the last fiscal.

• The real estate and housing sector constituted eight per cent of Gross Value Added (GVA) in 2014-15; this number grew to 9.1 per cent in 2015-16.

• Since 2011-12, the real estate and housing sector has grown at a Compound Annual Growth Rate (CAGR) of 8.1 per cent.

• Past few years have witnessed a slump in the construction sector – 0.6 per cent in 2012-13, 4.6 per cent in 2013-14, 4.4 per cent in 2014-15, and 3.7 per cent in 2015-16.

• Although, the real estate sector witnessed weak sales and a rise in inventory of unsold housing units, housing prices in many cities and towns increased in 2015, according to the National Housing Bank's RESIDEX (index of residential prices).

• As compared to 2014, of 26 cities, 20 cities witnessed an increase in prices in 2015. The highest growth of nine per cent was witnessed in Guwahati followed closely by Pune with eight per cent growth. On the other hand, the maximum fall of eight per cent was witnessed in Chandigarh, followed by a fall of four per cent in Delhi.

• A heavy inflow of capital in the sector has been reported over the past few years. According to estimates, about US$10 million or Rs 60,000 crore was invested by domestic and foreign investors in the sector since the beginning of 2015.

• A major constraint in this sector is of procedural delay. As per World Bank's 'Doing Business 2016', out of 189 economies, India ranked 183rd in terms of construction permits.

• It is also estimated that about 25 per cent of housing projects were delayed in India due to poor project management and delay in regulatory approval.