Real Estate India Sector

Topics: Real estate, Real estate development, Commercial property Pages: 31 (9381 words) Published: January 19, 2013

Corporate Catalyst India

India’s Real Estate Market and Industrial Infrastructure

Index Contents India’s Real Estate Sector 1.1 Overview 1.2 Demand Drivers 1.2.1 Residential Real Estate Development 1.2.2 Commercial Real Estate Development 1.2.3 Retail Real Estate Development 1.2.4 Hospitality Industry 1.2.5 Special Economic Zones (SEZs) 1.2.6 Infrastructure Development Projects 1.3 Cities are the Hubs of Development Activities 1.3.1 Mumbai-India’s Financial Centre 1.3.2 Delhi-NCR 1.3.3 Bangalore 1.3.4 Chennai 1.4 Foreign Direct Investment in Real Estate 1.5 Investment Trend 1.6 Impediments to Investment Page # 3 3 3 4 5 5 5 6 6 7 10 12 14 15 16 17 18

Corporate Catalyst India – client use only

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Corporate Catalyst India

India’s Real Estate Market and Industrial Infrastructure

1.1 Overview With around 1.1 billion people, India is the second most populous country after China and it is expected to overtake it by 2030. Its economic transformation over the past decade has pushed up real GDP growth to an average of 6 per cent per annum since 1992. India is emerging as an important business location, particularly in the services sector. Its favourable demographics and strong economic growth make the country an attractive place for property investors, given that demand for property is determined chiefly by business development and demographic trends. Historically, the real estate sector in India was unorganised and characterized by various factors that impeded organised dealing, such as the absence of a centralized title registry providing title guarantee, lack of uniformity in local laws and their application, nonavailability of bank financing, high interest rates and transfer taxes, and the lack of transparency in transaction values. In recent years however, the real estate sector in India has exhibited a trend towards greater organisation and transparency, accompanied by various regulatory reforms. These reforms include: • • • • Government of India support to the repeal of the Urban Land Ceiling Act, with nine state governments having already repealed the Act; Modifications in the Rent Control Act to provide greater protection to homeowners wishing to rent out their properties; Rationalization of property taxes in a number of states; and The proposed computerization of land records

The trend towards greater organisation and transparency has contributed to the development of reliable indicators of value and the organised investment in the real estate sector by domestic and international financial institutions, and has also resulted in the greater availability of financing for real estate developers. Regulatory changes permitting foreign investment are expected to further increase investment in the Indian real estate sector. The nature of demand is also changing, with heightened consumer expectations that are influenced by higher disposable incomes, increased globalization and the introduction of new real estate products and services. 1.2 1.2 Demand Drivers These trends have benefited from the substantial recent growth in the Indian economy, which has stimulated demand for land and developed real estate across the real estate industry. Demand for residential, commercial and retail real estate is rising throughout India, accompanied by increased demand for hotel accommodation and improved Corporate Catalyst India – client use only Page 3 of 29

Corporate Catalyst India

India’s Real Estate Market and Industrial Infrastructure

infrastructure. Additionally, the tax and other benefits applicable to Seas are expected to result in a new source of real estate demand. Key demand drivers


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• Entry of global brands • Organised retailing only 2% of total retail industry • India ranked as second most attractive retail destination by AT Kearney

• Increased business travel – both domestic &...
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