Engulfing the period of stagnation, the evolution of Indian real estate sector has been phenomenal, impelled by, growing economy, conducive demographics and liberalized foreign direct investment regime. However, now this unceasing phenomenon of true estate sector has started to exhibit the signs of contraction.

What can be the reasons of such a trend in this sector and what future course it will take? This write-up tries to discover answers to these concerns…

Overview of Indian actual estate sector

Since 2004-05 Indian reality sector has tremendous development. Registering a growth price of, 35 per cent the realty sector is estimated to be worth US$ 15 billion and anticipated to grow at the price of 30 per cent annually more than the next decade, attracting foreign investments worth US$ 30 billion, with a number of IT parks and residential townships being constructed across-India.

The term real estate covers residential housing, industrial offices and trading spaces such as theaters, hotels and restaurants, retail outlets, industrial buildings such as factories and government buildings. True estate involves acquire sale and improvement of land, residential and non-residential buildings. The activities of real estate sector embrace the hosing and building sector also.

Birla Tisya for key source of employment generation in the nation, getting the second largest employer, next to agriculture. The sector has backward and forward linkages with about 250 ancilary industries such as cement, brick,steel, building material etc.

Thus a unit boost in expenditure of this sector have multiplier impact and capacity to generate earnings as high as 5 times.

All-round emergence

In actual estate sector main element comprises of housing which accounts for 80% and is increasing at the price of 35%. Remainder consist of industrial segments office, shopping malls, hotels and hospitals.

o Housing units: With the Indian economy surging at the price of 9 % accompanied by increasing incomes levels of middle class, developing nuclear households, low interest prices, modern day method towards homeownership and modify in the attitude of young functioning class in terms of from save and acquire to invest in and repay possessing contributed towards soaring housing demand.

Earlier price of houses utilized to be in a number of of practically 20 occasions the annual revenue of the purchasers, whereas these days many is significantly less than 4.five times.

According to 11th 5 year program, the housing shortage on 2007 was 24.71 million and total requirement of housing during (2007-2012) will be 26.53 million. The total fund requirement in the urban housing sector for 11th 5 year program is estimated to be Rs 361318 crores.
The summary of investment needs for XI strategy is indicated in following table

Situation Investment requirement
Housing shortage at the starting of the XI strategy period 147195.
New additions to the housing stock for the duration of the XI plan period such as the further housing shortage throughout the program period 214123.1
Total housing requirement for the strategy period 361318.1

o Office premises: speedy development of Indian economy, simultaneously also have deluging effect on the demand of commercial house to assistance to meet the requires of organization. Development in industrial office space requirement is led by the burgeoning outsourcing and data technologies (IT) sector and organised retail. For example, IT and ITES alone is estimated to call for 150 million sqft across urban India by 2010. Similarly, the organised retail industry is most likely to require an added 220 million sqft by 2010.

o Shopping malls: over the previous ten years urbanization has upsurge at the CAGR of 2%. With the growth of service sector which has not only pushed up the disposable incomes of urban population but has also become more brand conscious. If we go by numbers Indian retail market is estimated to be about US $ 350 bn and forecast to be double by 2015.

Hence rosining revenue levels and altering perception towards branded goods will lead to greater demand for purchasing mall space, encompassing robust growth prospects in mall improvement activities.

o Multiplexes: one more development driver for genuine-estate sector is growing demand for multiplexes. The greater development can be witnessed due to following variables:

1. Multiplexes comprises of 250-400 seats per screen as against 800-1000 seats in a single screen theater, which give multiplex owners extra advantage, enabling them to optimize capacity utilization.