By Mr. Agnelorajesh Athaide, Co-founder and Chief Mentor of The Business Opportunities Club (BOC), Serial & Social Entrepreneur, Real Estate Developer, Global Citizen, Educationist, Angel Investor and Motivational Speaker.
The Indian real estate sector has undergone a profound transformation over the past five years. From the disruptive twin shocks of demonetisation and GST in 2016–17 to the liquidity squeeze triggered by the IL&FS collapse in 2018, the industry entered the 2020s carrying considerable structural baggage. The pandemic then delivered a further blow — yet by 2024, the sector has demonstrated remarkable resilience. Residential sales across the top eight cities reached record highs in 2023–24, with over 4.1 lakh units sold, surpassing even pre-pandemic peaks. Yet beneath this revival, four fundamental challenges continue to shape and constrain the sector's long-term trajectory.
1. Infrastructure Delays and the Regulatory Bottleneck
India's real estate developers must navigate one of the world's most complex pre-construction approval environments. Despite years of reform advocacy, a developer in a major metropolitan area typically requires clearances from 30 to 40 separate authorities before breaking ground — a process that can consume six months to two years and inflate project costs by 15–25 per cent even before a single brick is laid.
RERA, which celebrated its fifth anniversary in operation in 2022, has matured significantly as a regulatory framework. With over 90,000 real estate projects registered across the country and more than 72,000 agents enrolled under state RERA authorities, the legislation has brought a degree of transparency and financial discipline that was sorely absent in the pre-RERA era. Escrow mandates — requiring developers to park at least 70 per cent of project receipts into ring-fenced accounts — have substantially reduced the misuse of buyer funds that characterised the previous decade's crisis projects.
However, RERA's success in policing financial conduct has not resolved the upstream problem of regulatory complexity. State-level implementation has been uneven; several states have diluted RERA's provisions or allowed extended timelines that effectively reward slow execution. The long-promised single-window clearance mechanism — which would consolidate the dozens of approvals into one unified process — remains largely aspirational in most states as of 2024, with only a handful of states making meaningful progress on its implementation.
2. Land Availability and Title Disputes
The availability of developable, clear-title land in and around India's major cities remains a persistent structural constraint. MahaRERA data has consistently shown that a significant proportion of real estate projects in Maharashtra — particularly in the Mumbai Metropolitan Region — carry some form of title litigation. In Mumbai, estimates suggest that upwards of 25–30 per cent of active residential projects have encountered legal disputes over land ownership, encroachment, or conversion status.
The problem is compounded by the fragmented nature of land ownership in peri-urban areas, where agricultural land must be converted to residential or commercial use before development can proceed. The conversion process is governed by state-level land revenue codes that vary substantially in their efficiency and transparency. In states like Goa and Karnataka, land conversion remains a time-consuming and occasionally opaque exercise, despite the Digital India push to migrate land records onto digital platforms.
The Land Acquisition, Rehabilitation and Resettlement Act of 2013 continues to generate friction in large infrastructure-linked land assembly, where the consent and compensation provisions — while designed to protect landowners — have in practice delayed projects involving public-private collaboration. A more streamlined framework for consensual land pooling, of the kind implemented successfully in parts of Gujarat and Andhra Pradesh, offers a potential model for wider adoption.
3. GST Rationalisation and the Affordability Equation
When GST was introduced in 2017, its application to the real estate sector was one of its most controversial elements. The initial rate structure imposed 12 per cent GST on under-construction properties, a sharp increase from the earlier effective incidence of approximately 4.5 per cent service tax. The backlash from homebuyers and developers was significant, and in 2019 the GST Council revised rates downward: to 5 per cent for under-construction market-rate units and 1 per cent for units qualifying under the affordable housing segment.
While the 2019 revision eased some of the burden, the removal of input tax credit — which accompanied the rate reduction — has created a complex pass-through problem. Developers can no longer offset GST paid on raw materials, contractor services, or other inputs against their output tax liability, which effectively means the cost of construction has risen on a net basis for many project typologies. The sector has been advocating for a rationalised regime that either restores input tax credit or brings the effective rate down to levels that genuinely incentivise construction of mid-segment and affordable housing at scale.
Stamp duty, which continues to be levied separately by state governments, adds a further 5–7 per cent to the cost of property registration in most major states — meaning the combined statutory cost of acquiring a home from a developer can approach 10–12 per cent above the base price. This remains a significant drag on demand, particularly in the ₹50–80 lakh price band where first-time buyers are most price-sensitive.
4. PropTech's Promise — and the Digital Divide
Perhaps the most transformative shift in Indian real estate over the past five years has been the rise of technology across every layer of the sector. The PropTech ecosystem has matured rapidly: digital property platforms now account for a substantial share of property discovery and initial enquiries; co-living and co-working operators use sophisticated yield management software; and large developers have invested in Building Information Modelling and project management platforms that compress construction timelines and reduce material waste.
The government's own digital initiatives — including RERA's online portals, the Digital India Land Records Modernisation Programme, and the integration of Aadhaar-based KYC into property registration — have reduced friction in a number of administrative processes that previously required multiple in-person visits to government offices.
Yet a significant digital divide persists. Smaller developers — who account for the majority of new housing supply in tier-2 and tier-3 cities — largely lack the capital and technical capacity to adopt advanced PropTech tools. The digitisation of land records, while progressing, remains incomplete in many districts. And the consumer-facing platforms, for all their reach, continue to struggle with the accuracy and completeness of listing data, particularly outside the top eight metropolitan markets.
The opportunity that PropTech represents — a more transparent, efficient, and trustworthy property market — is real and growing. But its full realisation will require not just private sector investment in technology, but a sustained public sector commitment to completing the digitisation of the foundational data infrastructure on which that technology must rest.
Looking Ahead
India's real estate sector stands at an inflection point. The demand fundamentals are, by any measure, compelling: a population of 1.4 billion, rapid urbanisation, rising incomes, and a housing shortage that the National Real Estate Development Council estimates at over 18 million units in the urban segment alone. The challenge — and the opportunity — lies in resolving the structural friction points that prevent this demand from being met efficiently, fairly, and at scale. RERA has provided the governance architecture; the next phase requires governments at both central and state levels to complete the job of regulatory modernisation that remains unfinished.