New Property in Mumbai Requires Transparency to Become Global

Property in Mumbai along with property in the rest of the country attracts less than one percent of the global funds that flow into the global real estate market annually. Attracting a mere six billion dollars in investment from overseas is certainly not praiseworthy and may in fact be a cause for alarm. The reasons for the poor show by the Indian real estate market is simply due to the fragmented nature of the industry that has a few set norms and standards for builders and developers to adhere to. Furthermore a lack of transparency combined with poor regulatory governance has deterred serious PE funds from investing in much of the property in Mumbai and in projects in much of the rest of the country.

The Center’s Thoughtful Decision

Projects in Mumbai stand to benefit from the recent measures undertaken by the central government, which shall increase transparency and make it feasible for PE firms to confidently invest in Indian real estate. Better governance and better industry practices will provide a shot in the arm to Indian realty. The industry has a dire need to attract far more global capital than it does today. 

The Need For Credibility and Governance

The CREDAI (Confederation of Real Estate Developers Associations of India) has more listed more than 11,000 builders and developers across India yet only a little more than 120 such builders and developers have been able to deliver all projects over the past twelve years in the time stipulated. Comparable to the percent of global foreign funds that flow into India, the number of Indian builders who consistently deliver projects in a timely fashion also stands at a paltry 1 percent, which deters both investors and end users from entering the market.

The Attraction of Being Attractive

Only a few builders in Mumbai and across the rest of India have been able to attract foreign PE funds to invest money in their projects. Once builders have found themselves governed by the stipulations of RERA (Real Estate Regulatory Act) and bestow greater transparency to customers and PE funds, the projects of such builders and developers in Mumbai and projects in other cities in India will attract greater foreign funds to launch projects and enjoy greater sales in the primary market respectively. 

The trust deficit, which many builders and developers in Mumbai suffer from, must be addressed in order for the countries real estate market to truly become global. Trust must be earned not only from end users but also from foreign PE firms to ensure the maturation of the business practices of builders in Mumbai and of real estate in India as a whole.