Reit-inspired improvements to India’s property sector are proving a boon amid the pandemic
- The launch last year of the country’s first real estate investment trust has helped increase market transparency and attract institutional investors, improvements which laid the foundation for the sector’s resilience amid the Covid-19 downturn
In the league table of investment transactions in Asia’s commercial property sector, India has long been a bit player. Between 2017 and 2019 – record-breaking years for real estate deals globally – the region’s third-largest economy averaged just US$5.5 billion in annual transactions, accounting for a pitiful 3 per cent of yearly investment volumes in Asia, data from JLL shows.
Real estate has suffered from the same woes plaguing other industries in India: a lack of regulatory transparency and policy predictability, a slow-burning crisis in the financial system and a dearth of economic and structural reforms. While some progress has been made since Narendra Modi became prime minister in 2014, many problems have worsened.
As is the case elsewhere, the virus has accentuated pre-pandemic trends. One of the most conspicuous is a painful credit crunch, hobbling India’s efforts to counter the damage wrought by the pathogen. Funding strains faced by shadow banks – which seized on traditional banks’ bad-debt-related problems to ramp up their lending – have become more acute, piling pressure on the property sector, the biggest beneficiary of nonbank credit.
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