However, now this unceasing phenomenon of real estate industry has started to exhibit the symptoms of contraction.
What can be the reasons of such a trend in this industry and what future course it takes? This report tries to find answers to these questions…
Summary of Indian property sector
Since 2004-05 Indian reality sector has tremendous growth.
Real estate entails buy sale and development of land, residential and non-residential buildings. The actions of Justin Billingsley Arizona real estate sector embrace the hosing and construction industry too.
The industry accounts for major source of employment creation in the nation, being the second largest employer, next to agriculture. The sector has backward and forward linkages with roughly 250 ancilary industries like brick, concrete,steel, building material etc..
Therefore a unit increase in expenditure of this sector have multiplier effect and capacity to create income as high as five times.
In property sector major component comprises of home which accounts for 80% and is increasing at the rate of 35%. Remainder include commercial sections office, shopping malls, hotels and hospitals.
O Housing units: With the Indian economy surging at the rate of 9% accompanied by rising incomes amounts of middle class, developing nuclear households, low interest rates, modern approach towards homeownership and change in the attitude of young working class in terms of save and buy to purchase and repay having led towards surging housing demand.
Earlier cost of homes used to be in several of almost 20 times the annual income of the buyers, whereas today multiple is less than 4.5 times.
Based on 11th five year program, the housing deficit on 2007 was 24.71 million and complete requirement of housing throughout (2007-2012) will probably be 26.53 million. The total fund requirement in the urban housing industry for 11th five year program is estimated to be Rs 361318 crores.
The summary of investment requirements for XI strategy is indicated in following table
SCENARIO Investment requirement
Housing shortage at the beginning of the XI plan period 147195.0
New additions to the housing stock throughout the XI plan period such as the extra housing shortage during the program period 214123.1
Total housing requirement for the plan period 361318.1
O Office assumptions: rapid development of Indian market, simultaneously also have deluging effect on the need of commercial property to assist to meet the requirements of company. By way of instance, IT and ITES alone is projected to require 150 million sqft throughout urban India by 2010. In the same way, the organised retail business is likely to require an additional 220 million sqft by 2010.
O Shopping malls: On the previous ten years urbanization has upsurge in the CAGR of 2%. Together with the development of service sector that has not just pushed up the disposable incomes of urban population but has also become more brand conscious. If we go by numbers Indian retail industry is estimated to be approximately US $350 bn and prediction to be double by 2015.
Thus rosining income amounts and changing perception towards branded products will cause higher demand for shopping mall space, surrounding strong growth prospects in mall development activities.
O Multiplexes: yet another growth driver for real-estate industry is growing demand for multiplexes. The higher growth can be seen due to following factors:
1. Multiplexes includes of 250-400 chairs per display as against 800-1000 chairs in one screen theatre, which give multiplex owners additional advantage, enabling them to maximize capacity utilization.
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