Like many other countries across the world, Indian real estate is booming. The property prices have skyrocketed in recent years making various schools of thought to express their opinions on this phenomenon. Is this really a boom or will it turn into a bubble?

The Indian real estate industry is on a high growth path with a current market size of $15 bn approximately. Moving on, it is expected to be over $50 bn by 2010, growing at a CAGR of 35-40%. The growth of this sector is crucial for the economy as Rs. 100 spent on real estate adds Rs. 78 to the GDP. The growth is being propelled by a variety of factors which include, political reforms, favorable interest rate regime leading to easy finance availability, rising income levels and the market getting more organized. The growth is organic, as the majority of the demand is primary, i.e., consumption demand in different areas of real estate development. The favorable factors supporting this boom are:

Political reforms in relation to real estate: The government is quite rational when it comes to infrastructure and development in the country as it is required to achieve and maintain a growth rate for the economy. The real estate sector being directly related to it, is being given due importance. The government has made suitable amendments in the FDI regulations, taxation structures and various land acts in order to attract more foreign investment into the country.

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