Today, India is considered as a land of opportunity for investment and business. Looking at the reports by the Economic Survey 2014-15, a flagship annual document released by Finance Ministry of India- The real estate sector constituted 7.8% of India’s GDP in 2013-14.
The growth of this sector received an impetus in 2005 when the government allowed foreign investment, resulting in revenue inflow of approximately USD10.5billion, as per the FDI statistics of 2013. From the time of opening the doors to foreign investors, several high profile investors from across the globe have invested in this sector and gained significant dividends.
Seeing the trend of growth, several non-banking financial companies (NBFCs) and private equity funds (PEs) have begun investing jointly in realty projects. This has allowed bigger transactions while safeguarding them from risk. This is due to a slumping market and structured deals always seem to work better. The idea is to protect the principal amount with some possibility of an increase.
3. Hub Of Economic Development
From the standpoint of investment in the commercial real estate division, Mumbai has established itself as the city that leads in this area. The returns are expected to be in the range of 12-19 per cent in the coming 5 years. Followed by Mumbai, Bengaluru and Delhi- NCR are the next cities in this division
4. Office Realty Segment
In the office realty segment, Delhi-NCR is the leader, with around 88 million sq. ft. of occupied office space – this is, out of the total 110 million sq. ft., available in this segment. The majority of the space has been occupied by industry sectors such as retail, information technology, e-commerce, and consulting.
5. Corporate office space
Corporates in the growth phase took up around 35 million sq. ft. of the office space in the year 2015 – the second highest figure since 2011 in the history of the Indian realty sector.
6. Leased space
In the realm of leasing office space, India had led the activity in Asia in the last one year, accounting for at least half of the total office leased space in the latter part of 2015. Delhi was the most prominent player in this segment.
7. Sixth most expensive office market
Apart from Delhi NCR, the Connaught place deserves special mention. The occupancy cost in Delhi’s Central Business District of Connaught place is approximately USD160 per sq. feet per year – this makes it the sixth most expensive office market area in the world
8. Smart city project
In keeping with the growth trend, the Indian Government has extended support to this sector. In 2015 alone, the central cabinet approved around 100 smart city projects in the country and raised foreign direct investment for settlement development, Special Economic Zone and township projects to a 100 per cent
9. Budgetary allocation
The central budget for 2015-16 allocated USD3.72 billion towards urban and housing development
India’s economic growth has been strong and one of the major drivers of this growth is the Indian realty sector. The rapid rise in income levels, a younger population supporting nuclear families, increased development, movement of people to large cities, and the growth of allied sectors have contributed to a steep rise in demand for high quality real estate.
The Indian realty developers are revamping their strategies and looking at new ways to meet challenges. Even the modern day consumer is better versed and does not settle for less. Family owned realty businesses are being outrun by the ones managed by professionals and the emphasis is now on managing several projects across the country through centralized processes. The realty businesses now have become more organized, employ highly qualified staff, and source materials from the very best. The surge of foreign direct investment into the Indian realty sector has enhanced its efficiency and made it more transparent. The developers are now paying more attention towards managing their accounting systems in order to keep to the due diligence standards and ensuring complete transparency and integrity.
If the current trend is anything to go by, it is certain that the Indian realty sector will be invigorated further and will grow tremendously. Many more medium and long-term investments will add significantly to this sector, making it highly viable for those with stakes in it.
Author: Chandini Ann creates conversations that challenge and change perceptions. She writes and expresses in a way that elicits myriad thoughts