Current Trends in Indian Real Estate

The past few years have witnessed the emergence of the Indian real-estate industry as one the biggest sectors for investments. The continuous growth can be attributed to the liberalization of direct investment norms, the introduction of SEZ Act in India and low prices that continue to attract investors from both India and abroad.

Indian Real Estate Market

A recent survey indicates that India has the fourth ranking among the top Asian destinations for direct foreign investment. Being the largest democracy with transparent property laws, India attracts more investors than any other country in the region.

Some of the major factors that have contributed largely in the growth of this sector are:

Ø  Strong and continuous economic growth – Being the fourth largest economy in the world while maintaining a growth rate of over 7% for the past few years, India has also witnessed a steady growth in its real-estate industry. Various economic reforms coupled with increased globalization and demand has propelled its progress. The steady economic growth has led to the rise of areas like Delhi NCR, Hyderabad, Chennai, Pune, Kolkata and Bangalore. Moreover, the economic rise is no longer centered on the bigger cities with states like Bihar and Gujarat leading the charts. This has further enhanced real-estate market in these states.

Ø  Introduction of FDI in the real-estate sector - The introduction of Foreign Direct Investment (FDI) in the real estate sector has enhanced the Indian real-estate industry’s position as one of the most rewarding avenues for investment. This policy has allowed foreign investment in the market and has kindled the interest of the some of the world’s most renowned builders. Their entry into the Indian real-estate market will bring along efficient management, advanced technology along with effective regulatory policies.

Ø  The rise of the middle class – With a population of over 300 billion people falling in the middle class with higher incomes and better education, the workforce is shifting base beyond the four metropolitan cities. High aspirations together with more disposable income at hand motivate people to invest in real estate.

Ø  Continuous growth and development of the IT sector – TheIndian IT sector has shown the upward trend for past few years with many Multinational Companies and corporate increasing the demand for commercial property. This has also led to the increase in employment opportunities, consequently helping in the overall economic growth and increase in disposable income at the hand of prospected real-estate investors. This growth has not only had a positive impact on commercial property, but residential and industrial property as well.

Ø  Accessibility to bank loans – With the incoming of various multinational banks in the Indian market, loans for property are easily accessible now. It is no longer a tough job to seek and get a bank loan with easier norms and regulations and various loan repayment options available.

Ø  The demographic factor – India is the second largest populated countries in the world with over 75% of its population well below the age of 50.

According to ENAM securities research, the Indian real-estate market will grow at a CAGR of 33% over the next five years. The upward trend is also witnessing a huge gap in demand and supply. However, with more foreign investments set to enter the real-estate market in the near future, this development and growth is here to stay.

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