Rakesh Jhunjhunwala, Indian Billionaire Investor, Wants Indian Real Estate Developers to Concentrate on Affordable Housing Sector

On February 17, 2022, Mr. Jhunjhunwala addressed a Confederation of Indian Industry (CII) event.  He spoke on a few important topics including that of real estate in India and its various aspects. Mr. Jhunjhunwala focused on the fact that listed developers' return on capital is six to seven percent, and that actions must be done to raise the return on capital. He also expressed confidence in the expansion of real estate investment trusts (REITs) in India, pointing out that the units of three REITs launched on local stock markets had been favourably accepted by investors.

Affordable Housing in India - the need of the hour

One of the main things that Mr. Rakesh Jhunjhunwala stressed on was the need for Indian real estate developers to concentrate on the affordable housing industry in India with a real emphasis on affordability. This would enable more Indians to own their own homes and thus provide impetus in various other facets of their lives.

Commercial real estate in India is also a strong suit for Jhunjhunwala. He believes the logistics business is in its infancy and has a lot of potential.

Some of the key triggers for the Indian real estate sector, according to the billionaire investor, are consolidation in the real estate sector, the distinction between land owners and property developers, low interest rates on home loans, and the expectation of increased employment in the service sector. Rakesh Jhunjhunwala also feels that for India to flourish as a nation, real estate must first develop.

Over the previous 12 months, the Indian real estate market has gained tremendous impetus, with increased demand for residential apartments. Housing costs are also rising. Due to inflationary tendencies in building raw materials and total operating costs for developers, more than half of house purchasers and real estate investors in India predict housing prices to increase in 2022.

The Indian housing industry has vastly improved after the Real Estate Regulation and Development Act was enacted throughout the country. The regulatory framework, on the other hand, must continue to adapt in order for the real estate industry to thrive. Mr. Jhunjhunwala also suggested that the Indian government digitise the land records and provide digital certificates of title.

The well-known and appreciated Indian investor encouraged Indian real estate developers approaching the capital markets to seek cash via initial public offerings to be aware of the capital they have raised, the reason for which it was obtained, and the kind of return that may be delivered on that capital.