Even though the real estate sector has not been at its best for the last year or so, with the prices of property going up but demand going down, there are prospects of the demand surging again. According to an analysis of HDFC data, houses across the country are more affordable today than they were about a decade ago.
The data shows that the average cost of a house purchased by its borrowers was Rs 12 lakh in the year 2002. However, over the years the average amount paid for a house rose by about Rs 40 lakh in 2011.
The primary reason behind this growth has been the steady progress of the Indian economy. The disposable income of an average Indian today is much more than it was 10 years ago. Moreover, the emergence of a strong young middle class community has also been hugely responsible for the growth of the real estate sector.
According to Ramesh Nair, managing director (West) of Jones Lang LaSalle India, “Over the last few years, the number of HNI investors and corporates who are seriously looking at investing into Indian office space has increased manifold. Mumbai continues to hold its own as India's numero uno office space investment destination, with companies from all over the world unerringly zeroing in on the financial capital. As South Asia's only true financial hub, Mumbai is among India's best places to invest in commercial real estate. In times of global economic uncertainty, investors flock to markets that have consistently proved their long-term stability and fundamentals.”
Metro cities like Mumbai and Delhi have emerged as potential destinations for real estate development.
Rajesh Goyal, managing director of RG Group, a Delhi based real estate developer says, “Delhi property market is growing at an outstanding rate on account of various factors. These include humongous improvement in the transport system, expansion plans of Delhi Metro Rail which is going to cover its 3rd Phase. Certainly the price of properties falling in Delhi Metro Reach has escalated drastically. Take for instance a recently held study in New Delhi which is the 16th most expensive real estate market of the world and along with this; it is the costliest retail destination in India.”
The growth of the real estate sector however depends a lot on the policies adopted by the government to facilitate investment in the sector. The Indian government’s latest stand regarding foreign direct investment (FDI) policies has done a lot in encouraging and increasing the number of investment in Indian properties.
The positive outlook of the government reflected in this year’s Union Budget announcement as well as its outlook on FDI has led to a sudden rise in attention towards the real estate sector. The sector one of the largest employers in India, it is at the center of attention now.
Investment in areas such as residential, retail and commercial properties in metro cities like Mumbai, Delhi, Kolkata and Chennai is likely to grow at rapid pace over the next few years and this trend is expected to continue.