real estate Indian: an overview
This sector is one of the most globally recognized sectors. In India, real estate is the second largest employer after agribusiness and is intended to grow at 30 per cent over the next decennary. This sector constitutes four sub sectors – housing, retail, cordial reception, and commercial.
The demand for office space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect. Brought on effects in all sectors of the economy.
The market is expected to touch US$ 180 billion by 2020. Housing sector is expected to contribute around 11 per cent to India’s GDP by 2020. Retail, hospitality and commercial real estate are also growing importantly, providing the much-needed infrastructure for India’s growing needs.
New housing launches across top seven cities in India increased 27 per cent year-on-year in January-March 2018.
Sectors such as IT and ITES, retail, consulting and e-commerce have registered high demand for office space in recent times. Office space demand in the country increased 23 per cent year-on-year in January-March 2018 with office space absorption at 11.4 million square feet during the quarter. Private equity inflows in office and IT/ITES real estate have grown 150 per cent between 2014 and 2017 backed by a strong attraction towards office sector
There were significant price increases, providing the illusion of handsome returns for investors and buyers alike. Combine that with the propensity to build ever-larger units at a higher price point, and most real estate is unaffordable for the average buyer.
After all, how many people can afford to buy apartments worth Rs5-10 crore in a country where the average household income is Rs40,000?
With sales velocity going down and prices flat to declining, cash flows have declined and construction has slowed down dramatically. The slowdown in construction activity further sends the wrong signal, scaring the next round of buyers.
And I’m talking about the capital. Most of that invested capital has earned returns in single digits or in a majority of cases, been negative. And therein lies the problem.
The global investment herd is a backward looking pack. They primarily look at historical returns to decide whether to allocate more money to a specific market. In this sense, our record is abysmal. Couple that with the fact that we are nothing more than a rounding error in a global investment portfolio, and the probability of a large pool of equity capital allocation for India is low.
Indian Real Estate
Real Estate India