Tall skyscrapers, sprawling residential complexes, the new suburbia, apartment towers, cottages and duplexes etc….they are all there in our very own country called India.
The real estate market
Residential properties today constitute about 80% of the real estate market in terms of volumes with an annual growth rate of 34%. Growing population and increase in the purchasing power of the middle class has not only created a huge demand in housing sector but also a gap of 22.4 million residential units. According to the 10th Five Year Plan the demand has been 4.5 million houses each year during the 2002-2007 tenure.
The growth
The growth rate in terms of investment and returns has been a sustained 25% to 30%. The expansion plans have given rise to 269 other industries related to real estate like finance and banking, mortgage, insurance etc.
Factors for growth
1. Escalation in property prices and a boom in the real estate development (as much as 60% in some areas like Sohna Road on Gurgaon) is predominant!
2. India has emerged as the fastest growing economy after China. However the rate of growth has been phenomenally larger in real estate due to its open investment policies.
3. The Indian middle class and the affluent or ‘upwardly rising’ can dream of owning houses on a much lavish scale. This has been due to the increase in the purchasing power, fatter pay packets, more jobs and a booming economy.
4. Banks and mortgage companies have also revised their company policies in the post liberalization era which has resulted in lower interest rates.
5. Nuclear families today have more disposable income to spend on housing and household.
6. The environment in the real investment India has been NRI friendly!
The opportunity
NRI s are of the opinion that real estate India has not been tapped to even 20% of the real estate market. When global companies like Goldman Sachs invests $68 milliion in housing projects in India the market definitely looks hopeful for other domestic players like DLF, Unitech, Omaxe, JMD, Sahara etc. Scope of expansion exists to more than 30 to 35 cities all across India where the population is 1 million.
Key pointers highlighting the growth prospects in residential properties in India
• High Returns
• Escalation of property prices
• Easy available home loans at low interest rates
• Returns on rentals
Growth areas
• Delhi and Mumbai- more matured
• Pune
• Chennai
• Hyderabad
• Bangalore
• Kolkata
• Hyderabad
• Tier-2 cities and NCR areas of Delhi
The rentals in these areas are expected to grow at 3-5% and the capital value is expected to move to 7-8%.
Conclusion
Today buying your dream house is a living reality! It is expected that within the next 5 years this growth will pick up by another 45 to 50%. Surely we can look forward to a changed world around us in the near future.
Mark Steven a content writer,copy writer and an associated editor to the Real estate website. Currently he is dealing with subjects like foreign direct investment and Real estate market in India.
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