India's housing and urban development sector is set for a major transformation driven by rapid urbanisation, infrastructure growth, and policy reforms, according to a recent report by KPMG. The report outlines that affordable housing, rental expansion, and regulatory improvements under the Real Estate (Regulation and Development) Act (RERA) will define the next growth phase.
Urbanisation Trends and Vision
With India's urban population expected to reach around 40 percent by 2036 and nearly half the population living in cities by 2050, the report emphasises that current decisions in housing, planning, and financing will significantly influence the country's trajectory towards Viksit Bharat 2047. The real estate sector is increasingly seen not just as an economic indicator but as a structural driver of growth, job creation, and urban liveability.
Affordable Housing: A Key Priority
Unlocking affordable housing supply, especially for Economically Weaker Sections (EWS) and Low-Income Groups (LIG), is a critical focus. Structural challenges such as rising land costs, approval delays, fragmented regulations, and limited financial access hinder project delivery. The report recommends targeted interventions including higher Floor Area Ratio (FAR) for affordable projects, streamlined single-window approvals, digitised land mapping, and reduced development charges. Strengthening last-mile infrastructure and aligning master plans with real-time urban growth are also essential.
Rental Housing: Formalising an Informal Sector
Rental housing is emerging as a vital component of urban policy. Currently fragmented and largely informal, the sector suffers from low institutional participation and limited investor appeal. The report suggests formalising rental housing through GST rationalisation, inclusion under priority sector lending, converting vacant housing stock into rental assets, and developing co-living models for students, workers, and senior citizens. Adopting Affordable Rental Housing frameworks and public asset monetisation could significantly expand supply.
Regulatory Reforms: RERA and IBC Coordination
Strengthening the regulatory ecosystem is crucial, particularly the interface between RERA and the Insolvency and Bankruptcy Code (IBC). Key recommendations include early stress detection systems, digital integration of quarterly progress reports, project-wise insolvency resolution, and improved coordination between RERA authorities and insolvency professionals. These reforms aim to prioritise project completion, protect homebuyer interests, and reduce systemic uncertainty.
Conclusion
The report concludes that India's urban transformation depends on execution-driven reforms, stronger institutional frameworks, and deeper public-private collaboration. A balanced focus on affordability, rental ecosystem development, and regulatory resilience will define the next phase of sustainable urban growth.
