However, this unceasing phenomenon of real estate sector has started to exhibit the symptoms of contraction.
What can be the reasons of such a trend in this sector and what future course it will take? This report tries to find answers to those questions…
Summary of Indian real estate sector
Since 2004-05 Indian fact sector has enormous growth. Registering a growth rate of, 35 per cent the realty industry is estimated to be worth US$ 15 billion and anticipated to rise at the rate of 30 per cent annually over the next ten years, attracting foreign investments worth US$ 30 billion, with a number of IT parks and residential townships being constructed across-India.
The term property covers residential home, commercial offices and trading spaces such as theaters, restaurants and resorts, retail outlets, industrial buildings such as factories and government buildings. Acqualina Sunny Isles Beach Real estate entails buy sale and development of land, residential and commercial buildings. The activities of property industry embrace the hosing and construction sector too.
The sector accounts for important source of employment generation in the country, being the second biggest employer, alongside agriculture. The industry has forward and backward linkages with about 250 ancilary industries such as cement, brick,steel, construction material etc..
Therefore a unit increase in cost of this sector have multiplier effect and capability to generate income as large as five times.
In real estate sector major component comprises of home that accounts for 80 percent and is growing at the rate of 35%.
O Housing units: With the Indian economy surging at the speed of 9% followed closely by rising incomes amounts of middle class, growing nuclear families, low rates of interest, contemporary approach towards homeownership and shift in the attitude of young working class in terms of save and purchase to buy and repay having contributed towards surging housing demand.
Formerly cost of houses used to be in several of almost 20 times the annual income of the buyers, whereas today multiple is less than 4.5 times.
According to 11th five year program, the housing deficit 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 industry for 11th five year plan is estimated to be Rs 361318 crores.
The summary of investment requirements for XI strategy is indicated in following table
SCENARIO Investment requirement
Housing deficit at the beginning of the XI plan period 147195.0
New additions to the housing stock during the XI plan interval including the additional housing shortage during the program period 214123.1
Total housing demand for the program period 361318.1
O Office premises: accelerated development of Indian economy, concurrently also have deluging effect on the need of commercial real estate to assist to fit the requirements of company. Growth in commercial office space requirement is led from the burgeoning outsourcing and information technology (IT) sector and organised retail. As an example, IT and ITES alone is estimated to take 150 million sqft across urban India by 2010. In the same way, the organised retail business is very likely to require an additional 220 million sqft from 2010.
O Shopping malls: On the previous ten years urbanization has upsurge at the CAGR of 2%. Together with the development of service industry that has not just pushed up the disposable incomes of urban inhabitants but has also become brand conscious. If we go by amounts Indian retail industry is estimated to be approximately US $350 bn and prediction to be double by 2015.
Thus rosining income levels and shifting perception towards branded products will cause higher demand for shopping mall space, surrounding strong growth leads to mall development activities.
O Multiplexes: yet another growth driver for real-estate industry is growing demand for multiplexes. The greater growth can be witnessed because of following factors:
1. Multiplexes comprises of 250-400 seats per display as against 800-1000 seats in a single screen theatre, which give multiplex owners extra advantage, allowing them to maximize capacity utilization.
2. Aside from these non-ticket earnings like food and beverages and the leasing of surplus space to retailer offers excess revenues to theater developers.