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Real Estate India - Buy, Sale, Rental Properties
Real Estate Investment in India - How Big is It?
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India has enormous potential in all its property investment categories. Strong population growth, a large pool of qualified workers, greater integration with the world economy and increasing domestic and foreign investment are fuelling demand for office, retail and residential property.
This demand growth can also be applied to many special property classes, such as hotels or second homes. Going forward, it will be a matter of exploiting this potential. For the real estate industry, three aspects are most particularly important.
- First, further opening to foreign investment is desirable. Not only do international investors have the means to finance new construction projects, but also possess the expertise in market analysis, facility management and building construction. In the medium term these will act as catalysts to bring greater transparency to the market.
- Second, India needs a stronger capital market base for property financing. The debate on the potential introduction of REITs and real estate funds points in the right direction. The introduction of REITs in 2007 will give international investors in particular a familiar investment vehicle. Private investors could also enter into indirect investment in real estate. Although interest in new products is most likely to come primarily from institutional investors, the rising middle class is likely to seek new instruments aside from direct property investments in the medium term.
- Third, the government needs to step up developing the urban infrastructure. In recognition of this, India’s finance minister Shri P. Chidambaram presented an extensive urban investment package during his budget speech for fiscal year 2005/2006: “If our cities are not renewed, they will die.”
In December 2005 the Jawaharal Nehru National Urban Renewal Mission estimated that the selected 63 cities in India will require annual investments of USD 4 Billion. Roughly half of this is for the seven biggest cities. In his latest budget speech on February 28, 2006 the finance minister also announced that the government wishes actively to promote the establishment of new towns.
Trends in the Indian office markets
For the whole of India, three trends are likely to hold over the next few years. First, office supply must increase considerably. In the three locations described, the office stock will have to increase by a total of nearly 20 million sf. annually in order to keep pace with the growing demand. Taking all the Indian cities having a population of over 1 million, nearly 55 million sf. must be completed each year. This could even prove to be a very conservative estimate. Not only have vacancy rates fallen in the last few years but the market for IT outsourcing is still far from exhausted. India is expected to gain above-average benefits from the further globalisation of services.
Second, the supply of space is shifting from the traditional CBDs towards secondary centres as a result of sharply higher land prices in the city centres. Another reason is that modern office buildings in newly developed areas enable the higher quality standards that are essential for IT services. Refreshing Proprty Trends !!!! Let's Share you Views With us.
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