The Industry
The Real Estate sector in India is gearing up to the next level. The development in the Real Estate market encompasses growth in both commercial and residential spheres. Further, it has been estimated that there would be shortage of 26.53 million houses during the Eleventh Five Year Plan
During April-September 2011-12, the Indian Real Estate and housing sectors received US$ 453 million in foreign direct investment (FDI), according to the Department of Industrial Policy and Promotion India (DIPP).
Further, the industry also witnessed growth in private equity (PE) investments as well. In the current calendar year so far total investment from PEs was around US$ 741 million.
Market analysis pegs returns from realty in India at an average of 14% annually. The housing sector has been growing at an average of 34% annually, while the hospitality industry witnessed a growth of 10-15% last year.
The importance of the Real Estate sector, as an engine of the nation’s growth, can be gauged from the fact that it is the second largest employer next only to agriculture and its size is close to US $ 12 billion and grows at about 30% per annum. Five per cent of the country’s GDP is contributed by the housing sector. In the next three or four or five years this contribution to the GDP is expected to rise to 6%.
The Real Estate industry has significant linkages with several other sectors of the economy and over 250 associated industries. One Rupee invested in this sector results in 78 paise being added to the GDP of the State. A unit increase in expenditure in this sector has a multiplier effect and the capacity to generate income as high as five times. If the economy grows at the rate of 10% the housing sector has the capacity to grow at 14% and generate 3.2 million new jobs over a decade. The relaxed FDI rules implemented by India last year has invited more foreign investors and Real Estate sector in India is seemingly the most lucrative ground at present. Private equity players are considering big investments, banks are giving loans to builders, and financial institutions are floating Real Estate funds. Indian property market is immensely promising and most sought after for a wide variety of reasons.
