8/7/2019 Indian Real Estate Report

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Indian Real Estate Report

"If the human race wishes to have a prolonged and indefinite period of material prosperity, they have only got tobehave in a peaceful and helpful way toward one another." -Winston Churchill. The heresy of typical Indians haschanged the orthodox mindset of building and designing a house to live in it. A ramification of this is that housesare nowadays counted as a transitory asset. The idea of buying a house that will last a lifetime has gradually

vanished. The buzzword nowadays is 'investment'. Both the policymakers and the stock- brokers share an unitedview in this aspect(although moved by different intentions). 'The growth in the real sector is not unreal' saidS.K.Jain, President Global Infocom. In this study we make an attempt to vivisect the real and unreal components inthis eye-catching sector.

Th e Real Estate Boom: A genuine Eup h oria

Indian real sector has seen an unprecedented boom in the last few years. This was ignited and fueled by two mainforces. First, the expanding industrial sector has created a surge in demand for office-buildings and dwellings. Theindustrial sector grew at the rate of 10.8 percent in 2006-07 out of which a growth of 11.8 percent was seen by themanufacturing sector. Second, the liberalisation policies of government has decreased the need for permissions andlicenses before taking up mega construction p rojects . Opening the doors to foreign investments is a further step inthis direction. The government has allowed FDI in the real estate sector since 2002. FDI was deemed necessary inthe view of making the sector more organised and increasing professionalism. farmers. The villages adjacent to themetro cities have experienced sky-rocketing land prices. This has induced farmers to sell their land for goodmoney .

F uture Prospects on Real Estate Industry

The real estate market in India is yet in a nascent stage and the scope is simply unlimited. It does not resemble abubble that will burst. An unhindered growth for the next twenty years is almost sure. This is because theoutsourcing business in India is going in great guns and this entails a huge demand for commercial buildings andurban housing besides improvement in infrastructure.The organised retail market in India is also accelerating with players like WalMart, Bharti, Reliance etc.looking forward to make a foray thus stepping up the demand for real estate.

According to former Planing Commission Advisor Tarun Das, a price index for the housing market to track pricemovement must be incorporated. The government must ensure that there is no shortage of funds. Sebi's(SecuritiesExchange Board of India) recent harbinger of permitting real estate mutual funds in both private and publicsector will go a long way in attracting funds from small investors who emphasize on certain return. Another impediment that can be eased on the discretion of government is the existing tax laws and other complex regulationsrelating to multidimensional real estates such as industrial parks and SEZs(Special Economic Zone). RITES( RealEstate Investment Trusts ) of the type introduced in U.S.,U.K. and Germany should be imitated and explored.