An Overview of the Real Estate Market in India
The size of the Indian real estate market is estimated to be around US$12 billion. The market is growing at a rate of 30% for the last few years. The main reason for this boom is due to the Government relaxation of foreign direct investment in real estate sector in India. The emergence of outsourcing businesses has also increased the demand for office and residential space considerably. It is estimated that high-end technology consultancy, software-programming houses, call centers etc have accounted for about 10 million square feet of real estate development between 2003 and 2004. Most of these are for housing purposes with the remaining for offices, hotels, shopping malls and hospitals.
This is the best time to invest in this sector as the industry is growing. INR 0.78 is added to the country’s GDP for every 1INR invested in construction industry. The real estate sector in India is also undertaking the construction of over 250 other ancillary industries. The construction industry is ranked 3rd by rating agency ICRA among 14 major sectors, which have direct, indirect and induced effect in various sectors of economy.
Many multinationals are relocated in India because of low costs skilled manpower and logistics. These companies require substantial space for work and residential purpose. It is estimated there will be the demand of around 66-million sq.ft space in next 5 years. The general trend is to build world-class business centers. These unique campus-style establishments are also called as temples of modern India because of their extent and importance. Hotels are also creating a presence and a major boom in hotel projects are expected in the next five years.
The mortgage penetration is currently very low at around 2%. Similar ratio is 51% in the USA and between 15-20% among the south-east Asian countries. There is tremendous potential in the real estate market in India.