Realty India -Challenges Ahead
Sunday, 20th April, 2008
Listing of real estate companies has brought a turnaround in the business and towards the perception about the sector. It has, for the first time highlighted the challenges the sector is facing. The urban planning is one of the major concerns this sector has to deal with. Economic growth forcing infrastructural development is an imperative. Reforms are required in Land acquisition because of saturation of good land bank in metros.
Real estate finance growth is for sure in terms of public and private equity and debt. High net worth individuals, mutual funds, close ended and PE funds, leads the markets currently in private equity space. Entry of global players in collaboration with national players in the industry may result in landscape change. Success in the emerging market bet on emerging trends and defining strategies accordingly.Urbanization today is driven by educated, professional workforce joined by rise in the middle class with higher disposable income, which is favouring the Indian developers. This would be the prime factor for a boom in the sector in year 2008. With nearly double digit growth in its GDP, India has an edge over other developing countries. All we need now is flexible government policies and reforms in the sector to offer an affordable housing in the country.
With a growth of over 8% in the last two years and an anticipated growth of over 7% in the coming 5 years, India being world’s fourth largest economy promises the demand of real estate outdistance the supply of real estate in all the major economic hubs of the country. There is a paradigm shift in terms of growth in real estate in metro cities. This boom would continue to gallop the Tier II and Tier III cities also, which would make them first preference of the realty players.
Over 150 million sq. ft space would be required by IT & ITeS by the end of 2010. With retail industry getting organized an additional 220 million sq. ft space would be required by then. Looking at the promising opportunities in the sectors international players and foreign direct investments inflow has been estimated over US $6 billion.
Developers are no more local players now, rather called as Pan India players, they have operations in all infrastructure verticals which has made Indian real estate sector one of the fastest growing sectors. Construction and facility management put together with real estate makes this sector the second largest employment generator in the country which has linked more than 250 adjuvant industries like cement, brick and steel through back and forth links. Though there is an acute shortage of technical manpower in this sector, a unit increase in the sector has a multiplier effect and the capacity to generate five times higher incomes.
