The Indian
economy is witnessing high growth; with rising GDP, better infrastructural
facilities, industrial development and more and more MNCs setting up offices
in the country. This has lead to an equal rise in the real estate sector in
the country, with real property also witnessing a boom in all the major
parts of the country.
The prices of residential, commercial and industrial properties are
experiencing an all time high with increasing demand not only from the
domestic, but also foreign investors. The Indian real estate sector has huge
potential demand in coming years. Government in different states is
allotting more land for residential, commercial and industrial purpose for
meeting the growing demand in the coming years.
Reasons of Real Estate Growth in India
- Boom in IT and BPO sector: The boom in the real estate sector
all across the country can be attributed to the growth in different
industries, especially in the IT sector. Most MNC companies have set up
corporate offices in various states, especially the NCR region, leading
to the rise in demand for industrial real estate. India has also become
a hub for outsourcing. A large number of international companies
outsource a large number of processes to India, leading to an increased
demand for office space.
- High Rate of Return: Gone are the days when investing in
shares and other bonds was considered one of the best investment
options. Real estate is considered to be the best investment option
yielding highest rate of returns. Rental incomes from investment in
properties is also yielding high returns. It is now being considered as
one of the most profitable and attractive business opportunities in the
present real estate scenario.
- Housing Finance and Interest rates: Lower interest rates,
combined with easy availability of housing finance, rising disposable
income and better paying jobs, have together given a boost to the demand
for residential properties in India.
- Growth in Retail Sector: The current growth in the retail
sector is another significant reason for the growth of real estate in
India. With the rising, shopping mall, entertainment and theme park
culture, more and more real estate developers are constructing malls,
multiplexes and entertainment parks leading to a rise in demand for
commercial property. Large companies like Reliance are also getting into
the retail sector. Rising disposable incomes and opening up of FDI in
the retail sector, have also pushed the growth of real estate in the
country.
Real Estate Scenario
The Indian real estate sector is one of the best investment options and
hence both domestic and international investors are heading towards the
country. The prices of real estate in certain parts of Delhi and Mumbai are
comparable with the highest in the world. With the rise in this sector,
investors can make the highest profits and return on their investments in
the shortest period of time.
The table below depicts the estimated demand and supply of real estate in
different parts of the country.
| Market |
Absorption
in 2006 (million sft) |
Estimated Supply in
2007 (million sft) |
Estimated Absorption
in 2007 (million sft) |
Excess supply
( % of Estimated Absorption) |
| Delhi NCR |
10.6 |
15.9 |
13.2 |
20% |
| Bangalore |
12.0 |
18.3 |
13.3 |
38% |
| Chennai |
5.3 |
19.5 |
6.5 |
200% |
| Pune |
4.6 |
14.3 |
5.8 |
146% |
| Kolkata |
3.9 |
8.3 |
5.0 |
66% |
| Hyderabad |
3.8 |
6.1 |
4.6 |
33% |
| Mumbai |
6.4 |
6.9 |
7.5 |
8% |
The central and the state governments are making efforts to encourage real
estate investments by global investors and NRIs. The government has allowed
FDI in the realty sector and therefore major foreign investors are tying up
with Indian realty developers to start residential, commercial projects.
These companies are undertaking world-class projects keeping the NRIs in
mind.
FDI
in Real Estate
Selling
Property