Boom & Bust of Indian Real Estate Sector
Enclose period of stagnation, the evolution of Indian real estate sector is phenomenal, fueled by the growing economy that promotes demographics and liberalized FDI regime. But now this incessant problem of real estate sector has started to show signs of decline.
What could be the reason for such a development in this sector, and what future course it will take? This article attempts to find answers to these questions …
Overview of the Indian real estate sector
Since the 2004-05 Indian reality sector has a tremendous growth. Registering a growth of 35 percent of the realty sector is estimated to be worth U.S. $ 15 billion and is expected to grow at a rate of 30 percent annually over the next decade, attracting foreign investments worth U.S. $ 30 billion, with a number of IT parks and residential townships being constructed across India.
The term property includes homes, offices and commercial trading spaces such as theaters, hotels and restaurants, shops, industrial buildings such as factories and public buildings. Real property includes the purchase and sale of development land, residential and non-residential buildings. Activities in real estate sector include hosing and construction sector also.
They account for significant source of employment generation in the country, which is the second largest employer next to agriculture. The sector has back and linkages with around 250 ancilary industries such as cement, bricks, steel, building materials etc.
Therefore, a unit increase in expenditure in this area has a multiplier effect and the capacity to generate income as high as five times.
All-round fremkomsten
The real estate sector important part consists of housing, which accounts for 80% and growing at a rate of 35%. The rest consists of commercial office segment, malls, hotels and hospitals.
• Housing: With the Indian economy rolling at a rate of 9% accompanied by rising income levels of middle class, growing nuclear families, low interest rates, modern approach to homeownership and changes in attitudes among the young working class in terms of the savings and buy to buy and repay has contributed to soaring demand for housing.
Earlier the cost of houses that used to be in multiple of nearly 20 times the annual income of the buyers, while today more is less than 4.5 times.
According to 11th Five Year Plan, was the housing shortage for 2007 24.71 million overall need for housing during the (2007-2012) will be 26.53 million. Of the total fund requirements of urban housing for 11th Five Year Plan is estimated to be Rs 361,318 crores.
The summary of the investment requirements for the XI Plan are listed in the table below