June 28, 2018

Series of policy initiatives and reforms are prompting improvement in transparency level in Indian real estate sector that has long remained opaque. Several measures including implementation of Real Estate (Regulation & Development) Act, 2016, land title insurance, the Benami Transactions (Prohibition) Amendment Act, aligning the sector with the Goods & Services Tax, demonetization, opening up of Real Estate Investment Trusts (REITs) have influenced India's ranking in global real estate transparency.

India has emerged as one of the top 10 countries to have registered maximum improvement in transparency in real estate over last two years, showed JLL's Global Real Estate Transparency Index (GRETI) 2018. The country's performance over last two cycles of JLL's GRETI indicates that it has moved up by five places to 35 since 2014 out of 100 countries that are mapped to over 180 parameters.

"India's remarkable improvement in the transparency scores across all markets has started to benefit the nation in the form of increased volumes of international capital being deployed into the country. Improved market fundamentals, policy reforms and liberalisation of FDI into realty sector and retail and strengthening of information in public domain were main influencers, along with digitisation of property records and assigning "industry status" to affordable housing," said Ramesh Nair, CEO, JLL India.

Private equity investments into property sector is one of the key indicators of the confidence of the investor community and the confidence is closely linked with the transparency of the property markets.

In India's case, the rise in private equity over these years reflects the growing confidence and comfort of the global funds. Private equity investment in Indian realty has grown in every year from $2.2 billion in 2014 to $4.7 billion in 2015, to $6.9 billion in 2016 and it was $6.3 billion in 2017.

"Institutional investors' confidence in Indian real estate is on the rise. Discussions about investing here are more optimistic not only in terms of returns but also based on environment which is getting more conducive for businesses," said Rubi Arya, vice chairperson, Milestone Capital Advisors.

Compared to similar market sized countries that are also part of the same 'semi-transparent' group; India's marked improvement is unmatched by its peers. Among BRICS Countries both China and South Africa remained on the same rank of 33rd and 21st, respectively as in 2016 assessment, Brazil slipped to 37th and Russia remained confined to 38th rank.

Nair believes India's ranking is expected to improve further on the back of the comprehensive implementation of the RERA in all states of India, introduction of insurance policies for land title insurance, pseudo-ownership of properties weeded out through Benami Transactions Act and the Goods and Service Tax (GST) regime.

The index measures transparency by looking at factors including data availability its authenticity and accuracy; governance- of public agencies as well as stakeholders of the realty sector; transaction processes and costs associated with those; and the regulatory and legal environment.

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