The Indian economy has transformed substantively over the last two decades, growing consistently at an average of 8% and is poised to take its place among the leading economies in the years to come. Strong performance of the economy can be particularly attributed to healthy growth in manufacturing and service sector. The economic performance of India has provided strong impetus to the real estate sector, which has been witnessing heightened activity in the recent years. Substantial end user and investor interest, large scale investment in infrastructure and rapid urbanisation has contributed to the growth trajectory of Indian real estate. The real estate growth story is clearly visible in urban centres such as Delhi, Mumbai, Bengaluru which has acquired global character and recognition. The real estate sector in the country is one of great importance. According to the report of the Technical Group on Estimation of Housing Shortage, an estimated shortage of 26.53 million houses during the Eleventh Five Year Plan (2007-12) provides a big investment opportunity. India leads the pack of top real estate investment markets in Asia for 2010, according to a study by PricewaterhouseCoopers (PwC) and Urban Land Institute, a global non-profit education and research institute, released in December 2009. The report, which provides an outlook on Asia-Pacific real estate investment and development trends, points out that India, in particular Mumbai and Delhi, are good real estate investment destinations. Residential properties are viewed as more promising than other sectors. While, Mumbai, Delhi and Bengaluru top the pack in the hotel 'buy' prospects as well. The study is based on the opinions of over 270 international real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants. Further, real estate companies are coming up with various residential and commercial projects to fulfill the demand for residential and office properties in Tier-II and Tier-III cities. For instance, Ansal Properties has several residential projects in cities such as Jodhpur, Ajmer, Jaipur, Panipat, Kundli and Agra. Omaxe has also planned around 40 residential and integrated township projects in Tier-II and Tier-III cities, majority of them being in Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan and Haryana. The growth in real estate in Tier-II and Tier-III cities is mainly due to increase in demand for organised realty and availability of land at affordable prices in these cities. According to the data released by the Department of Industrial Policy and Promotion (DIPP), housing and real estate sector including cineplex, multiplex, integrated townships and commercial complexes etc, attracted a cumulative foreign direct investment (FDI) worth US$ 8.4 billion from April 2000 to April 2010 wherein the sector witnessed FDI amounting US$ 2.8 billion in the fiscal year 2009-10.
INDIAN REAL ESTATE : RIDING THE GROWTH WAVE
The strong fundamentals of Indian economy are having a favourable impact on all assets classes of Indian real estate viz housing, commercial-office space and retail and hospitality. In recent years, the growth has spread out to tier two and three cities as well. High growth in services as well as manufacturing sector has resulted in high demand for commercial and industrial real estate. Further the economic growth has trickled down to the large Indian middle class increasing affordability and affluence. Improving living standards are driving the demand for better quality housing and urban infrastructure. In fact, housing in India is today moving for being viewed as a purely basic need to an aspirational purchase. Through high interest rates, coupled with soaring property prices have temporarily impacted affordability of home buyers the demand-supply mismatch and low home loans to GDP ratio in India are expected to fuel demand for housing in medium long run. The...
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