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One in 10 people on the planet will be living in Indian cities by 2047. Are we ready?

One in 10 people on the planet will be living in Indian cities by 2047. Are we ready?

By 2047, Indian cities will be the hubs of economic activities, learning, culture, and innovation. With more than 80 per cent of global GDP generated in cities, India has an immense opportunity to shape the future of the global economy.

Aarti Harbhajanka, Co-Founder, Primus Partners Aarti Harbhajanka, Co-Founder, Primus Partners

Bharat@2047 will be the biggest nation on earth in terms of population, with more than 1.6 billion people. Of these, about 50-60 per cent will be living in urban areas. Essentially, one in ten people on Earth will be living in Indian cities. Indian cities will be the hubs of economic activities, learning, culture, and innovation. With more than 80 per cent of global GDP generated in cities, India has an immense opportunity to shape the future of the global economy.

But as the finance minister stated in her Budget Speech “Urban planning cannot continue with a business-as-usual approach. We need to steer a paradigm change.” Budget 2023 can be a great opportunity to lay the foundation for "future cities" that are inclusive, affordable, resilient, environment-friendly, and have strong community vitality and quality of life. Some of the gaps that Government can look at plugging are as follows:

Development of Residential Rental housing industry in India
Rental housing has always been an integral part of the urban housing response across the world. Over the years, rental housing has seen an increasing trend world over, due to rising housing costs and demographic changes. In Switzerland, 56.6 per cent of population lives in rental housing, in Hong Kong 49 per cent, in Germany 48.1 per cent, in South Korea 44.8 per cent, in Austria 44.3 per cent and so on. 

Rental housing is crucial in urban areas as they have a large migrant population. Workers that come to cities for better economic prospects, graduates fresh out of college starting their career in a new city or students moving to different cities to pursue higher studies need rental housing as their first mode of residence. Rental housing is their launchpad from where they build careers and then move on to buy their own homes.

In India, about 31 per cent of the urban population resides in rental housing. Despite this, the policy and legal framework for rental housing is underdeveloped, as all Government interventions have traditionally been more focused towards home ownership instead of rental housing. Therefore, for India to achieve its vision for Housing for All, rental housing will play a crucial part.

India is witnessing a rise of Institutional Players in co-living, co-working, or commercial or student housing which is primarily rental housing. However, this sector remains largely unregulated and unorganized. According to the NSSO 2012, 71 per cent of households living in rented accommodations did so in the informal sector, with no written contract. In the budget for 2023-24, "Rental Housing" needs to be promoted to make housing affordable and accessible to migrant youth. To harness the full potential of our demographic dividend, it is essential that we provide the youth of our country safe (especially for young women), healthy, hygienic living conditions, which will make a tremendous positive impact on their lives by enabling their overall wellbeing and by providing an ideal environment for them to excel in their endeavors.

Greening the real estate sector in India
World Economic Forum reports suggest that globally the real estate sector is one the single most significant sectors in terms of CO2 contributions.

•    The sector consumes over 40 per cent of global energy annually
•    20 per cent of total global greenhouse gas emissions originate from buildings
•    There is a projected 56 per cent increase in CO2 emissions from buildings by 2030
•    Buildings use 40 per cent of raw materials globally (3 billion tonnes annually)
•    They generate 25-40 per cent of total solid waste
 
The figures are not much different in India. Moreover, construction activities are a direct cause of soil erosion and contamination, air contamination by asbestos particles and dust, and noise pollution. Globally, there is a great drive towards Green Buildings and India is adopting the same. In India, more than 9,000 Real Estate Projects have received Green Building Ratings but there is a long way to go. 

It is time for a massive Green Building Movement in India. Government should begin by ensuring all its buildings, both new and existing, are green-certified. Further incentives in terms of capital subsidy or property tax rebates may be provided to existing residential societies for the conversion of old buildings to green buildings.

Housing as a service not a product
The world is going through a fundamental shift where customers don’t simply buy products anymore and are increasingly looking to pay for services. The same changes can be noticed in the Real Estate sector. Today, the real work starts after the buildings are finished. New models are evolving where along with houses, developers provide a plethora of services post-occupation. Examples include:

(a) Senior Living Housing: Various services including medical, community, etc. included as part of a housing
(b) Student Housing: For students studying in different cities, low-cost rentals provide an educational and community environment in which to live and grow.
(c) Co-living or Studio Apartment: For working professionals, with all home maintenance services including cleaning, food, and community entertainment as part of the package.
(d) ResiTel: Residential and Hotel – Along with providing homes, developers ensure hotel/resort income for homebuyers.
(e) Residential Homes: Developers wrapping 5-10 years of repairs like plumbing, and electricians in the cost of house.

These emerging sectors need to be encouraged and existing laws need to be upgraded to accommodate these changes. We are on the cusp of a massive transformation in the Real Estate sector. India has built a strong foundation by enacting the Real Estate (Regulation and Development) Act, Ease of doing business, and so on. Now it is time to build on this foundation and pave the way for a brighter and more robust future.
 

Published on: Jan 11, 2023, 1:53 PM IST
Posted by: Sharmila Bhowmick, Jan 11, 2023, 12:49 PM IST