India
has come a long way during the last two decades backed by
a strong middle-class and the youth who make up half of its
population. It is a young nation, with businesses enjoying
good times. India is now one of the fastest growing economies
in the world after China. Amidst these developments, the real
estate market in India has witnessed significant changes in
the last few years and is witnessing another boom spurred
by the IT and BPO businesses, and availability of cheap housing
loans. These factors have created a new demand for commercial
and residential houses.
Most
importantly, FDI is now allowed in real estate in India. Overall,
the sector is scaling up, of course against many odds: unclear
titles, absurd tenancy laws, poor building standards, etc.
With the ongoing liberalization in the sector, various foreign
investors have shown a lot of interest to participate in the
real-estate industry in India. And the industry looks all
set to emerge as a big opportunity for investment. The growing
demand in real estate can be fulfilled only by a huge investment
in this sector. In the recent past, leading venture funds
from ICICI, HDFC, SBI, and Kotak Mahindra have floated issues
in the sector.
Over
the last decade, the average household income in urban areas
has grown at a CAGR of 5%. According to estimates, 80% of
the real estate developed in India is residential space and
the remaining 20% comprises of offices, shopping malls, restaurants
and hospitals. According to the 10th Five Year
Plan, there will be a shortage of 22.7 million housing units
by the year 2007. The changing lifestyles of Indians and better
incomes have led to the development of retail and hyper malls.
This, in turn, has led to the demand for space from the retail
sector.
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