26-27-Indian Realestate x2.qxp_A4 Temp 06/07/2015 15:27 Page 26
Continued growth in the Indian Property Sector
he real estate sector has been the backbone of the Indian economy and has been a major contributor in the economic growth. It is evident from the very fact that the Real Estate Sector contributes 8.53% of the total GDP and also witnessed growth rate to the tune of 30%. Nowadays with the changing attitude of people from living on rent towards owning their property the real estate sector has witnessed huge demand for the residential segment. The demand for commercial development is also growing at a fast pace due to a paradigm shift from unorganized retail towards organized retail coupled with MNCâ€™s interest in establishing offices here in India. For the second largest populous country, job creation is of utmost importance for it to return to its high GDP growth levels. Job creation primarily depends on the labour intensive comfort level and the Indian financial system is caught amidst liquidity trap.
Delhiâ€™s Central Business District (CBD) of Connaught Place has been ranked as the sixth most expensive prime office market in the world with occupancy costs at US$ 160 per sq ft per annum, according to a survey by CBRE. According to the National Housing Bank (NHB) Residex Index, residential property prices show an upward trend in the second half of 2014. First half had seen property prices dip, as the weak rupee and high inflation had a negative impact on spending. Needless to mention that 2015 will largely be about recovery. The Ministry of Statistics Program and Implementation and PwC Analysis predict a growth of 8 to 9 per cent. Added to this, the introduction of REITs, improved market sentiment and more efforts by the government to reduce project loopholes and bottlenecks in transactions will go a long way in clearing the way for positive trends in 2015. In India, real estate plays an important role, from affordable housing to infrastructure and generating employment. Here are some of the reasons why: l The Economic Survey of 2012-13 revealed housing to be the second largest industry that generates employment, after agriculture. l With more than 300 linked industries like steel, transport, construction, cement and brick, real estate contributes significantly to the country's GDP share and capital formation.
l NHB's report places real estate as the third most impactful industry in India in terms of its effect on other industries and fourth in terms of employment generation.
The Indian real estate market size is expected to touch US$ 180 billion by 2020. Also, in the period FY08-20, the market size of this sector is expected to increase at a compound annual growth rate (CAGR) of 11.2 per cent. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs. Real estate has emerged as the second most active sector, raising US$ 1.2 billion from private equity (PE) investors in the last 10 months. Foreign investors have bought tenanted office space worth over US$ 2 billion in India in 2014, a four-fold rise compared to the previous year, in order to increase their rent-yielding commercial assets in Asia's third largest economy. According to a study by Knight Frank, Mumbai is the best city in India for commercial real estate investment, with returns of 12-19 per cent likely in the next five years, followed by Bengaluru and Delhi-National Capital Region (NCR). Also, Delhi-NCR was the biggest office market in India with 110 million sq ft, out of which 88 million sq ft were occupied. Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high demand for office space in recent times.
Asian Voice & Gujarat Samachar
l The residential segment, comprising residential buildings, townships, schools, colleges and hospitals and other projects, makes the maximum overall contribution in the real estate industry and commands the largest part of its market share.
l The real estate sector employs more than 35 million people, especially low and medium skilled labour
Directly impacts manufacturing
l Attracts a lot of money in foreign direct investment (FDI) Recap of 2014, its main events and economic drivers
l According to Colliers Research, Bangalore and Chennai witnessed maximum demand and growth, while Kolkata, Mumbai and Gurgaon were unchanged. Despite this, many developers launched new projects during the end of 2014.
l There is a backlog of unsold property. 2014 has seen delays in approvals, project clearances and targets, apart from debt commitment on property and government spending less in this area and a huge delay in finishing projects l Construction industry has grown 2 per cent from 2014 to 2015.
Finance Banking Insurance 2015