The Boom & Boom of Indian Real Estate Sector
Infusing the stagnation period The development in the Indian real estate industry has been awe-inspiring, fueled by a growing economic growth, favorable demographics, and a liberal foreign direct investment policies. But, the unending phenomenon in the real estate industry is beginning to show signs of shrinking.
What are the causes for this trend in this field and what is the future direction it might follow? This article will try to provide the answers to these questions…
A brief overview of Indian real estate industry
Since 2004-05, the Indian real estate has experienced a massive expansion. With a growth rate of 35 percent, the real estate sector is estimated to be worth US$15 billion. It is expected to grow at a rate of 30 percent each year over the next 10 years and attracting foreign investment worth US$30 billion with numerous IT parks and townships for residential use being built across India. Visit:- https://bantinbatdongsan247.com/
The term”real estate” covers residential homes, commercial offices and trading spaces like hotels, theaters, restaurants and other establishments retail stores, industrial structures like factories and government structures. Real estate includes the purchase, sale and development of properties, both residential and non-residential structures. The real estate sector include hosing and construction industry too.
The industry is the largest sources of employment in the country, and is the second-largest employer after agriculture. It has forward and backward links with around 250 other industries like steel, cement, brick, materials, etc.
Thus, a per-unit increase in the amount of money spent by this sector can have a multiplier effect and the capacity to earn as much up to five times.
In the real estate industry, the largest part is housing, which is 80% of the total and is growing at a rate of 35 percent. The remaining portion is commercial segments such as such as shopping malls, office buildings, hotels , and hospitals.
o Housing units with the Indian economy growing at a rate of 9 percent, it is accompanied by rising income levels of middle class, increasing nuclear families and low interest rates, contemporary homeownership practices and a shift in the mindset of the working class youth regarding saving and buy to purchase and pay back, has contributed to the rising demand for housing.
The cost of homes in the past were in multiples of 20 times the annual earnings of buyers, but today the number is lower than 4.5 times.
In the 11th five-year plan, the housing deficit in the year 2007 stood at 24.71 million, and the total need of housing in the period (2007-2012) is 26.53 million. The total amount of funds required in the housing sector in urban areas for the 11th five-year plan is estimated at Rs 361318 crores.
The investment requirements summary for XI plan is shown in the this table
SCENARIO The need for investment
Housing shortages at the beginning of the XI plan’s period 147195.0
The housing inventory has been expanded in the XI plan period , including the housing shortage that was added during this plan time 214123.1
The total housing requirement for the plan time 361318.1
Office space: the rapid expansion of the Indian economy can has a devastating effect on the commercial property market to support the requirements of businesses. The growth in office space for commercial demand is driven by the growing outsourcing and IT (IT) industry as well as organised retail. For instance, IT and ITES alone will require 150 million square feet across urban India in 2010. In the same way, the organized retail sector is expected to need an additional 220 million square feet in 2010.
Shopping malls: Over the last ten years, urbanization has increased at a CAGR of 2percent. The growth of the services, which has not just pushed up your disposable earnings of the urban people, but also made them more conscious of brands. If we look at the numbers, Indian the retail sector is believed to be around US $ 350 billion and is expected to more than double by the year 2015.
This means that rising income levels and a shift in perception toward brand-name products will result in increased demand for spaces, which will also provide potential for growth in the development of malls.
Multiplexes: Another driving factor for growth in the real estate sector is the growing the demand for multiplexes. The increased growth could be observed due to the following reasons:
1. Multiplexes have between 250 and 400 seats per screen , compared to 800-1000 seating in a single-screen theater The owners of multiplexes have an another advantage, allowing them to maximize capacity utilization.
2. In addition to these, non-ticket revenue such as food and drinks and the leasing of space to retailers provides additional revenue to theatre owners.