A more transparent horizon in IndiaJuly 8, 2016 / By
India has stepped up its game!
In our recently released Global Real Estate Transparency Index, Asia Pacific and India both made positive strides; with India’s primary cities moving up four spots in the ranking table to 36th among the 109 markets worldwide. Tier 2 & 3 cities also made good progress and interestingly, both rank higher than comparable cities in China. To learn more about transparency in Asia Pacific, please take a look at my colleague Lee’s blog released earlier this week.
So what drove the gains in India? In the last two years, the government started to make progress on structural reforms including further opening up the economy to foreign investors in a bid to boost growth. Relaxed FDI rules in many sectors and passage of key legislation such as the Real Estate (Regulation & Development) Act helped improve investor sentiment and in turn, increased demand for better quality data across the country. However, this is not to say that gains and data availability are uniform across the country, but the gap between cities in India is narrower than in many other countries in the region.
Government initiatives not only helped improve access to real estate information but also supported enhanced transparency in areas such as buyer protection, land acquisition and processes/procedures. Recently, the exemption of dividend distribution tax removed one of the major hurdles believed to be holding back the development of the REIT industry.
Although notable headway has been made, there are many areas that still need further improvement. Digitisation of land records, which has been emphasised quite strongly in the last Budget, has been making good progress but more effort needs to be made to ensure that these records are easily accessible to the public. Collecting data is only one step in the process to improving transparency. The investment transaction process is another notable area where more progress is needed to ensure that it is fair and transparent for all parties involved, and this should help bring down transaction costs which are high by international standards.
On the regulatory front, more stringent enforcement in areas such as land planning, building codes and financial oversight would go a long way to further boosting investor sentiment and community well-being.
Despite being on the right track, India shouldn’t rest on its laurels but rather be proactive and look to other countries in the region and around the globe for ways to further improve transparency in the real estate industry. To find out more about the transparency index, please take a look at the report or visit the interactive website.
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