Real Estate Growth and Investment in India – A Case Study

The Indian economy has grown rapidly during the past 15 years, which contributed to exponential growth in real estate properties across India. According to a recent article by Indian government, realty market in India accounts to a whopping 11% of the National GDP. Ever wondered why there is rapid growth in this industry, this case study gives a snapshot of factors that is contributing to its favor.

Population of many large cities in India has grown tremendously over the past decade. There is a colossal demand for residential and commercial properties in Tier 1 and Tier 2 cities. Some of the Top 5 residential cities in India are Delhi-NCR, Mumbai, Bangalore, Chennai and Pune. There are many key drivers for this exceptional real estate growth and investment in India.

a) Government of India has put up a roadmap for economic reforms to step up Infrastructure development by inviting investments from domestic and international players by creating business-friendly and Investor-Friendly atmosphere. Also, easing of monetary economic policies by cutting interest rates to make home loans by banks to buyers easily available and affordable.

b) Growing Urbanization and large scale migration of population from rural to urban locations in search of employment, higher income, better living conditions which has led to an increased demand for residential and commercial properties in the area.

c) From an Investment standpoint, since stocks and mutual funds are extremely volatile to market conditions, more people including middle-class income group, Non-Resident Indians are investing in real estate which offers high returns both in Short and Long term investments due to soaring property prices. Investment in residential properties also gives an option for residential buyers a second income to supplement their monthly Income.

d) Business activity and Setting up of IT development Centers, BPO, large scale manufacturing units in automobile and Engineering Sectors by multinationals has spurred growth in commercial office space requirements. As more and more MNCs setup shop in cities it opens new lines for overall growth & investment in real estate industry. These industries bring lot of job opportunities in to the system. More jobs means rising income levels, increased purchasing power for property buyers which is also another factor for real estate investment and growth.

e) State Governments in India have given green signal to develop residential townships, commercial centers, shopping malls near Industrial hubs, IT hotspots inviting both domestic and international investments for Constructing Connectivity bridges, state roadways, rail networks to ease the commuting traffic. Many large residential and commercial projects have sprung up to cater to the growing housing demand for real estate.

f) Augmenting the real estate growth are government policies in the pipeline to allow FDI (foreign direct investment) in retail, insurance, healthcare sectors of the economy which will likely see the real estate development and investment opportunities in India for many years to come.

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