India's housing and urban development sector is poised for a significant transformation, driven by rapid urbanisation, infrastructure expansion, and ongoing policy reforms, according to a recent KPMG report.
Urbanisation Trends and Economic Impact
The report highlights that India's urban population is expected to reach approximately 40% by 2036, with nearly half of the country likely to reside in cities by 2050. It underscores that decisions made today in housing, urban planning, and financing will play a pivotal role in shaping the nation's progress toward Viksit Bharat 2047. Furthermore, real estate is increasingly recognised not just as a measure of economic activity but as a core driver of growth, employment generation, and urban quality of life.
Affordable Housing Challenges and Recommendations
A major focus area identified is the expansion of affordable housing, particularly for Economically Weaker Sections (EWS) and Low-Income Groups (LIG). However, this segment continues to face challenges such as rising land prices, approval delays, fragmented regulatory procedures, and limited access to finance, which hinder project execution. To address these constraints, the report recommends interventions including higher Floor Area Ratio (FAR) for affordable housing, faster clearances through single-window approval systems, digitised land records, and reduced development charges. It also stresses the need to improve last-mile infrastructure and align urban master plans with current growth trends.
Rental Housing as a Policy Priority
The report points to the growing importance of rental housing in urban policy. It notes that the segment remains largely unorganised and informal, with low institutional investment and limited appeal for investors due to modest returns. According to the report, rental housing can be developed into a more structured market through measures such as GST rationalisation, inclusion under priority sector lending, conversion of vacant homes into rental units, and promotion of co-living and specialised housing for students, workers, and senior citizens. It also supports the use of Affordable Rental Housing frameworks and monetisation of public assets to increase supply.
Regulatory Coordination and Efficiency
On the regulatory front, the report calls for stronger coordination and improved efficiency, particularly between the Real Estate (Regulation and Development) Act (RERA) and the Insolvency and Bankruptcy Code (IBC). It suggests early detection of stressed projects, integration of quarterly progress reporting systems, project-specific insolvency resolution mechanisms, and better coordination between RERA authorities and insolvency professionals. These steps would help prioritise project completion, protect homebuyers, and reduce uncertainty in the sector.
Thus, according to the report, India's urban transformation will depend on execution-focused reforms, stronger institutional systems, and closer collaboration between public and private stakeholders. Affordability, rental housing development, and regulatory stability form the backbone of sustainable urban growth.
