India real estate market has gone through many tumultuous ways before crossing milestones. When the Britishers left India, real estate was left in a state of chaos and because of low demand the land prices were much more affordable but people didn’t consider real estate as an opportunity to invest. India’s mixed economic model helped in the development of industrialization but due to stringent rules on FDI (Foreign Direct Investment), per capital income growth of the Indian citizens remained excessively low.
Land ownership was disintegrated at the time of independence and Zamindari system was prevalent, where the land owners enjoyed high status with power and money and the cultivators were exploited. The devastating effects of such a system was clearly visible in many states of India like Uttar Pradesh, Bihar, West Bengal, Orissa and Madhya Pradesh.
According to the National Commission on Agriculture (1976) –
‘This was the root cause of the state of chronic crisis in which Indian agricultural economy was enmeshed before the attainment of Independence.’
- As published by insightonindia.com
In 1950-51, the tenants didn’t have any legal papers. The farmers paid a lot to sustain them. So, eradicate this system for the growth of the country, the land reform bill was introduced in 1951. The intent was to remove the authoritarian and exploitative system, to promote agricultural produce, and to replace the unproductive system.
The three main factors that contributed to the growth of real estate are:
- The entry of multinational companies in India, all the MNCs required lands in different cities of India for establishing them in the Indian market.
- The stock market of Indian experienced smooth growth with ease and optimism. Investors didn’t show any impromptu sentiments and money transaction happened without any hindrance.
- Market performed well under different parameters and considerations.
With time, the demand for housing and commercial properties increased which made real estate one of the most profitable sectors for investors and generated huge employment opportunities. Demand for premium offices, growth of infrastructure: highways, hospitals, educational institutes further contributed to the growth of real estate in India. It is estimated that a unit increase in the size of the real estate market can potentially impact the national income of the country.
The traditional real estate market was also stabilized by the steady growth of the middle class earnings and the hope of owning a property. The other contributing factors were:
- Splitting of joint families and each setting up of nuclear families.
- Decrease in interest rates by the banks, made it easy for the families to spend a major chunk of their earnings in real estate.
- Urbanization further contributed in the construction of multi storied buildings.
- Liberated tax measures as incentives for the growth of industries.
Today, real estate contributes to around 5% to the Indian GDP. Over 70 years of liberated strategies towards real estate has opened the gates for a sector that is destined to become one of the top most contributes in this booming economy.