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The growth curve of the Indian economy is at an all time high and contributing to this sustained growth is the real estate sector. The boom in the sector has been so appealing that real estate has turned out to be a more convincing investment as compared to other investment vehicles, such as capital and debt markets and bullion market. It is attracting investors by offering a possibility to invest in an environment with stable income yields, moderate capital appreciations, tax structuring benefits and higher security in comparison to other investment options.
A survey by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst & Young has predicted that the Indian real estate industry is poised to emerge as one of the most preferred investment destinations for global realty and investment firms in the next few years.
With the rules related to investing and repatriation relaxed to a large extent, an estimated 25 million Non Resident Indians (NRIs) living across 125 countries are investing in immovable property in India.
Residential shortage
One consequence of the GDP growth has been a phenomenal growth in the real estate market with returns of 20-30%! Rising disposable incomes, attractive financing terms and an increasing population will continue to be the driving forces of housing demand in India. India is short of about nine million housing units in urban cities alone. This deficit will escalate to 22 million units by 2008, according to estimates. The real estate market is expected to be worth $50bn in 2010, up from $12bn in 2006.
High demand for commercial real estate
The commercial property market has been growing at an annual rate of approximately 30% over the past eight years across major locations in India. Moreover, there is an up shooting demand for 200 million sq. ft over the next five years. The opportunity to invest in this market is fast driving prices up across India.
Retail sector facilitating real estate growth
The contemporary retail sector in India which is reflected in sprawling shopping centres and multiplex- malls is also contributing to large scale investments in the real estate sector with major national and global players investing in developing the infrastructure and construction of the retailing business. Over 500 shopping arcades are under construction phase and will be operational by 2008. With further companies in India and abroad set to invest in the retail industry, the prospects for the future look considerably attractive. |
