Development experts would argue that the housing sector is not a factor in economic development. But that is the traditional development economics. It only recognizes capital development as a supporting factor for economic development. But it does not take into account the real estate factor. The housing sector has always been the responsibility of the state in many countries under the tutelage of socialism such as the former Soviet Union or modern-day China. Most of Eastern Europe owns more than 90% of personal houses which were built by the state. However, in developing nations such as most of Asia, there is no such obligation on the state. The housing sector is mostly a personal household responsibility. But, there is nonetheless an economic impact of real estate development.
Foreign Direct Investment
In absolute development economic terms, foreign direct investment is a necessary factor in economic progress. Developing countries require foreign direct investment to grow and prosper. Therefore, foreign investors can make that investment directly in the emerging real estate business. However, this is being done at a minimal level due to a lack of awareness about the high return on investment. But since the real estate sector is now spreading across the nations and not just being limited to urban areas, it means that in the future it will become a huge priority.
Contributes towards Socio-Economics Goals
Real estate assets can provide social and economic safety for the owners. It is a long-term asset and can benefit the owner in times of economic crunch. Providing social safety is the cornerstone of any social policy of the government. This objective can also be achieved with the help of real estate assets. Therefore, there exists a positive economic impact of real estate development.
Bolsters Market Economy
The market opportunities increase due to real estate development. It creates new opportunities in terms of jobs and also creates demand for more business. The urban lifestyle or modern living is the most suitable form of capital development since it requires mass capital investment. In order to cater to a housing society many market and social facilities are required. The public infrastructure, commercial areas, and areas for social development are factors that are associated with the economic impact of real estate development.
Improves Infrastructure
Real estate capital ventures can bring in ingenuity of designs and better community development. This is necessary for the improvement of living conditions, and can also alleviate the condition of poverty. Development theorists have long argued that poor infrastructure is also a cause of poverty, especially in the urban areas of the developing world. Most of the infrastructure development took place in the decades of the 60s, 70, and 80s. Therefore, this is the old infrastructure that has degraded. Moreover, the bulging population also requires more infrastructure to be built.
Conclusion
These are important factors in the economic impacts of real estate development. The government can also contribute by making regulations, and laws that will further enhance the sector. It will also boost the sector by legitimizing its importance. Government-sponsored schemes can also be an intervention, therefore a lot of policy work can be done by the government in this sector. This is the right time to assess this importance and create a long-term strategy to sustain it. The real estate sector certainly has a lot of prospects for economic, social, and financial progress. Until now the real estate sector has progressed and survived on its own. Housing is an absolute necessity that has been felt by foreign investors as well. Making it a priority on the state level remains to be seen.
