As India embarks on another year of independence, the country's real estate sector has a lot to be grateful for, a lot to hope for - and still a lot to worry about.

Amidst the dual challenges of liquidity crisis and stuck projects that hang like persistent thunderclouds over the sector, we nevertheless inch closer to the ultimate goal of Housing for All by 2022.

From the viewpoint of stuck and delayed projects, the freedom to buy homes has turned into shackles for many. Over 1.74 lakh homes in 220 projects across the top seven cities are completely stalled. Housing worth over INR 1.77 lakh Crore is in limbo with zero construction activity.

The affected buyers exercised their freedom of choice - only to see their hard-earned money imprisoned with scarce prospects of parole until recently.

Nevertheless, this state of affairs is not unilateral and countless more Indians have indeed successfully achieved freedom from rent. Though not nearly as fast as can be hoped for, housing sales are picking up. In sharp contrast to earlier years, the Government has now given affordable housing a distinct identity and several valuable incentives.

2019 also saw rental housing being given its first tangible push. After decades of languishing in the dungeons of obsolescence, India's rental laws are being unfettered with an upgrade in the Draft Model Tenancy Act, 2019. Finally, the trust deficit between tenants and landlords can be bridged and both parties' rights and obligations are being clearly defined.

The most recent Consumer Protection Bill, 2019 promises to unleash a brand-new level of freedom to consumers - the freedom from misleading promotions. RERA had already clearly defined the acceptable from the unacceptable when it comes to real estate promotions, and this bill adds further muscle to consumer rights.

The era of misleading and/or inaccurate promotion of housing projects – including by celebrities - without fear of legal backlash is finally coming to an end.

And, finally, buying real estate in Jammu & Kashmir is actually something people from outside this long-disputed region will be at liberty to consider – once the dust of change settles.

However, for all the silver lining, the thunderclouds that overshadow the real estate sector on India's 72nd Independence Day cannot be dispelled by mere positive thinking. Real solutions are called for.

A Way Out of the Liquidity Crisis?

The NBFC crisis in late 2018 hit the already-ailing realty sector hard and brought whatever optimism and growth the residential segment was beginning to see to a screeching halt once more.

With minimal customer advances, the construction of several projects got stalled. Despite developers having all necessary approvals as well as the will to complete them, lack of funds held the entire situation hostage. End of the line? Not quite.

The Government is taking a series of steps to bail out the NBFCs. Union Budget 2019 made several announcements in support of financially sound NBFCs, few as they may be, in these turbulent times:

To purchase high-rated pooled assets of financially sound NBFCs, amounting to a total of INR 1 lakh crore during the current financial year, the Government will provide one time six months’ partial credit guarantee to Public Sector Banks for first loss of up to 10%.
To allow NBFCs to raise funds in public issues, the government has done away with the requirement of creating a Debt Redemption Reserve (DRR), which is currently applicable for only public issues (private placements are exempt).
The Finance Ministry announced that the National Housing Bank (NHB) will infuse an additional Rs 10,000 crore in NBFCs to improve funds inflow.
In its monetary policy, the RBI has gone the extra mile to revive confidence in well-functioning NBFC entities. The single-borrower exposure limit for bank lending to NBFCs has been increased to 20% of the lender’s capital (as compared to 15% earlier). The RBI will also recognise bank lending to registered NBFCs for select purposes as priority sector lending.