Rate of growth & Bust of Indian Real Estate Sector
Engulfing the time scale of stagnation, the evolution of Indian real estate field has been phenomenal, impelled by, growing economy, conducive demographics and liberalized foreign direct investment regime. However , this unceasing phenomenon of real estate sector has started to exhibit the very signs of contraction.
What can be the reasons of such a development in this sector and what future course it will take? This article attempts to find answers to these questions…
Overview of Indian real estate industry
Since 2004-05 Indian reality sector has tremendous expansion. Registering a growth rate of, 35 per cent the real estate sector is estimated to be worth US$ 15 thousand and anticipated to grow at the rate of 30 per cent annually over the next decade, attracting foreign investments worthy of US$ 30 billion, with a number of IT parks in addition to residential townships being constructed across-India.
The term real estate masks residential housing, commercial offices and trading spaces which include theaters, hotels and restaurants, retail outlets, industrial buildings that include factories and government buildings. Real estate involves purchase sale plus development of land, residential and nonresidential buildings. The activities for real estate vidéo 3d immobilier sector embrace the hosing and construction market also.
The sector accounts for major source of employment technology in the country, being the second largest employer, next to agriculture. Typically the sector has backward and forward linkages with about 250 ancilary industries such as cement, brick, steel, building material etc .
Therefore a unit increase in expenditure of this sector have multiplier effect and capacity to generate income as high as five times.
In real estate sector major component comprises of housing which often accounts for 80% and is growing at the rate of 35%. Remainder consist of commercial segments office, shopping malls, hotels and even hospitals.
o Housing units: With the Indian economy surging with the rate of 9 % accompanied by rising incomes numbers of middle class, growing nuclear families, low interest rates, modern technique towards homeownership and change in the attitude of fresh working class in terms of from save and buy to buy together with repay having contributed towards soaring housing demand.
Previous cost of houses used to be in multiple of nearly thirty times the annual income of the buyers, whereas today various is less than 4. 5 times.
According to 11th five year prepare, the housing shortage on 2007 was 24. 71 million and total requirement of housing during (2007-2012) are going to be 26. 53 million. The total fund requirement in the downtown housing sector for 11th five year plan is usually estimated to be Rs 361318 crores.
The summary about investment requirements for XI plan is indicated throughout following table
SCENARIO Investment requirement
Housing shortage at the beginning of the main XI plan period 147195. 0
New additions to the lodging stock during the XI plan period including the additional casing shortage during the plan period 214123. 1
Total housing dependence on the plan period 361318. 1
o Office premises: rapid growth of American indian economy, simultaneously also have deluging effect on the demand of commercial property or home to help to meet the needs of business. Growth in business oriented office space requirement is led by the burgeoning outsourcing and also the precise product information technology (IT) industry and organised retail. For example , THE IDEA and ITES alone is estimated to require one humdred and fifty million sqft across urban India by 2010. In the same manner, the organised retail industry is likely to require an additional 208 million sqft by 2010.