Real Estate Sector in India

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Real Estate Sector in India

• An Overview

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Real Estate sector is considered to be the
backbone of the Indian economy. It contributes
majorly in the growth and stability of the
economy.
India is one of the fast growing economies which
are attracting private domestic as well as
overseas funds and is the fifth largest
destination of foreign investment.
This real estate boom in India is linked to
countrys economic stability. It contributes to
around 8.5 of the total GDP.
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There are a lot of innovative ideas that came up
in the real estate sector some of which
completely transformed the face of the
sector. Owing to these changes India has took a
leap from being an undeveloped economy to a
developing one and is fast approaching towards
being a developed economy.
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Various construction groups are coming up with up
various out of the box ideas. Apartments in
Ghaziabad are a very fine example of
infrastructure development. Buildings and
townships in Projects in Ghaziabad are loaded
with facilities. This sector has been a good
employer as it provides large number of
employment opportunities and hence the second
largest employment generator in the economy.
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With the rapid growth in population and
urbanization there is a great demand for housing,
real estate projects were launched all across the
country especially in high population density
region of NCR. Some changes apart from
infrastructure that brought a revolution is
liberalization of FDI regulations, that is, the
decision to allow foreign direct investment up to
100 per cent in 2005 in townships which created
an environment friendly atmosphere for foreign
investors.
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But the global meltdown of 2008 in real estate
produced a downturn in the sector. With the
downfall, the capital-intensive sector started to
face a crunch situation and banks became more
cautious with lending money to construction
groups to invest in the sector which resulted in
lower loan-to-property value and lending loans to
only those projects which were nearing their
completion. Further developers were facing
problems with sources of funding such as stock
market. The biggest problem the developers had to
face was the delay in payments by buyers until
they had possessions for their property.
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Real estate industry took some big and wise
decisions to cope this problem. They targeted the
middle income group of the society and provided
them affordable houses and focused on profits
through high-volume and low margins of profit.
This helped the real estate industry to grow
and overcome the hindrances.
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The residential sector saw a great boost in the
first quarter of 2009. Many new projects were
launched with some price improvements. The cut
in bank interest rates, correction in the prices
and smaller apartment, a shift from luxury to
low-cost housing increased the affordability for
homebuyers. Many new locations which were
earlier not very attractive to homebuyers have
come up with townships like the Projects in
Ghaziabad.
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The recent trend has shown that the far flung
sub-urban areas which were rather inexpensive
came with high priced projects. With the recent
change in attitude of people from living on rent
to buying their houses has increased the demand
of new houses and has resulted in the development
of new townships. Apartments in Ghaziabad is an
example of development in sub-urban areas.
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With banks supporting the real estate sector
fully and the recent cut in repo rates has
brought happiness amongst the developers. To
meet the further demands of the industry the RBI
should plan to reduce the home loans so that more
buyers are inspired to buy homes. This will
help the real estate to flourish and take Indian
economy to next level.
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