According to Knight Frank, India will have to face or witness severe housing shortage. One of the main drawbacks in the construction sector is funding.

Housing shortage will be one of the biggest problems India will have to deal with.

Knight Frank India has published its latest research report entitled “Economy and Realty @ Glance.” In the global property consultant’s opinion the best way to meet the housing shortage is Real Estate Investment Trust.

The report concentrates mainly on the housing shortage which India faces now. According to the property consultants the best thing to meet the housing shortage is Real Estate Investment Trust (REIT) model.

Knight Frank India suggests that the funding of real estate projects can be met with REIT effectively. Funding is one of the main problems which the developers are facing and it can be well tackled through REIT.

As per Economy and Realty @ Glance, by 2031 the population in the cities will be around 600 million. It means an increase of over 200 million in just 20 years. This population increase will have many adverse impacts on the social and economic segments.

Housing shortage is going to be severe in India

Moreover the housing sector will be the worst hit by this population explosion in the cities. Already, according to the figures of 2012, around 94.98 million people live in slums in the top cities of India.

In order to meet the housing demand of these people, the government has launched Jawaharlal Nehru National Urban Renewal Mission (JNNURM), a housing project which aims to provide homes to the poor and weak economic class people. However the allotted number of homes, for the coming seven years, is only 1.6 million.

This alone shows how sharp the shortage of housing units will be. If the situation goes on like this, India will see a huge shortage of housing units within a couple of years.

Lack of viable funding options and foreign investment are the two main problems which the real estate sector faces now. Worsening the situation the amount of NRI investment in the real estate sector also decreased.

As a remedy for funding problems, Knight Frank suggests REIT which will enable the construction sector to raise sufficient fund for construction and property development.