The Indian economy has witnessed pivotal changes in the last 15 years. Consequently all industrial sectors have felt the influences and after-effects of this dynamic activity. India is one of the fastest growing economies in the world, with an 8% GDP growth in the last three years and with that has flourished the Indian Real Estate industry. In the last fifteen years, and more specifically in the last 3 years, Real Estate in India has observed a boom. The graph is on the rise. The growth may be attributed to several factors such as economic reform and liberalization, increased globalization, increase in business opportunities, heightened equity market activity, increasing demand, enhanced transparency, legitimized funding and favorable demographics. New reforms such as opening of FDI in the Real Estate sector and Real Estate Venture capital funds have propelled Indian Real Estate industry to become one of the highest investment generating avenues.
In a recent survey conducted by AT Kearney, India bags the second place in the list of attractive investment destinations. China takes the first place! This is because Indian real estate has transformed into an organized industry with global standards, contrary to the erstwhile industry that had been marked by fragmentation, disorganization and poor governance. The credit for this metamorphosis must go to the significant rise in investment, not only from within India but from offshore as well. The last couple of years have witnessed the increasing interest of international property consultants, developers and commercial banks in investing in real estate in India. This keen attention has brought into focus the emergence of private real estate funds. The result is an industry growth of 20% per annum! This unabated growth has raised the brows of skeptics who are worried that this spurt may at the end turn out to be a mere bubble. However, experts say that this growth is here to stay!
Another factor that plays a critical role in the current trend in the Indian Real Estate industry is the development of physical and social infrastructure. Residential, commercial offices, retail and hotels have their own place in the market. The presence of real estate majors from within India as well as abroad have ensured constant supply of capital which is absolutely necessary for the large scale of development that has been undertaken, especially in the infrastructure expansion of roads, airports, ports and SE's that require large funding. Total investment required in the tenth plan period, has been estimated to total Rs 1,108,800 crore, approximately. The committee on infrastructure, headed by the Prime Minister has come up with a figure of Rs. 1, 72,000 crore as the estimated amount to be invested in the National Highways Sector by the year 2012. Furthermore, it has been revealed in the Economic Survey (2005-2006) that India, in the next five years will attract as much as US $ 150 billion of FDI in the infrastructure sector alone.
Thus, the Indian Real Estate industry is lined up for a complete revolution. This revolution shall not restrict itself to the metros but has already seeped into interiors and smaller and new towns and cities. Moreover, this expansion will not be confined to a particular sector but will encompass residential, commercial, infrastructure and logistics, in terms of space and range. This growth is expected to continue, at least for the next few years. |
