past & future of real estate in india

8/8/2019 Past & Future of Real Estate in India

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PAST & FUTURE OF REAL ESTATE IN INDIAALONG WITH CHANGING ROLE OF

GOVERNMENT

KETAN BHINGARDEMBA UI & RM


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Real estate is a legal term that encompasses landalong with , improvement to land , such asbuildings , fences , commercial buildings and other site improvements that are fixed in location.

Real estate business is a real business as nobusiness is possible without it.

Real Estate Sector as a whole contributes about7% to GDP, employs around 32 million peopledirectly or indirectly and accounts for about 40% ofgross investment.


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Till 1960 , sector was unorganized and perceived as risky andspeculative business.

Developers mainly contractors and sub contractors werefunded from money lenders.

Customers accumulated funds from their own savings and saleof land and ornaments.

Banks did not provide funds or mortgage finance.


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Developers were mainly contractors and sub contractors.

HUDCO was set up in 1970 and HFI in 1977 to finance thehousing sector.

In 1988, NHB , was set up to channel resource for finance,national housing policy was later adopted by parliament in 94.


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Developers were mainly contractors and sub contractors.

HUDCO was set up in 1970 and HFI in 1977 to finance thehousing sector.

In 1988, NHB , was set up to channel resource for finance,national housing policy was later adopted by parliament in 94.


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Urbanization, growing population , migration, youthpopulation.

Lower cost of credit , government encourage commercialbanks to provide loans at cheaper rate of interest.

Higher levels of export.

Favorable business and regulatory regime.

Public private partnerships(PPP).


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Residential property coming up as investment option.

95% of investors surveyed prefer to take the SPV route for

investment

Liberalization of Indian economy.

Economy integrated with foreign players.

during period of 2002-2007 Sector commanded 30 % y.o.ygrowth.


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GROWTH OF REAL ESTATE IN LAST DECADE


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The current contribution of real estate to Indias GDP is about 7 %.

The real estate sector is one of the highest FDI attracting sectors in

India, having recorded FDI inflows worth more than 2.8 billionbetween 2000 and 2009.

Growth has been driven primarily by the I T & IteS sector, with anincrease in the demand for office space, growing presence offoreign businesses in India, global strides of Indian corporate and arapidly increasing consumer class.

After the 200809 global economic slowdown, the Indian realestate industry is now charting a path to recovery.


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Increase in home loan disbursements at a CAGR of 30%.

Age profile of home buyers is decreasing.

Premium and super-premium housing is growing.

Increasing urbanization 27.8% as per 2001 census.

Quality of housing is improving.

Ownership of houses is increasing


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In recent years, the industry has evolved from a highlyfragmented and unorganised market into a semi- organizedmarket.The sector can be divided into residential, commercial, retailand hospitality asset classes.

Real EstateSector

CommercialOffice Space

ResidentialSpace

RetailSpace

HospitalitySpace

Special EconomicZones (SEZs)


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5 times the umber by which GDP will have multiplied by 2030

590 million peoples will leave in cities, nearly twice the

population ofU

SA today

270 million people net increase in working age population

70 % of net new employment will be generated in cities

700 900 million square meters of commercial andresidential space needs to be built every year


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Residential property coming up as investment option.

Trend towards township projects.

95% of investors surveyed prefer to take the SPV route for investment.

42% of the respondents expressed that the presence ofIT/ ITeS industry has an impact on the investment decision.

Around 45% of the respondents ranked economic &

industrial profile as the most important parameter whileevaluating city for investment


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Logistics andwarehousing

Healthcareinfrastructure

Educationinfrastructure

Low-cost housing

Booming trade, bothinternational anddomestic.

MNCs establishingIndian operations.

Agricultural logisticsrequire creation ofcold chaininfrastructure.

Logistics required for large infrastructureand engineeringprojects.

Consolidation ofwarehousing, ifuniform tax regime isapplied.

Healthcare industryexpected to grow ata CAGR of 12 per cent over the next five

years.

The industry wasvalued at US$ 38.8billion in 2008.

Healthcare BPO is agrowing segment.

Medical infrastructureexpanding, with onemillion beds to beadded by 2012.

Medical tourismgrowth driven by lowcost and high-qualityservices.

Huge market withuntapped potentialand low competition.

Need for development of moreworld-classeducationalinstitutions.

Driven byknowledge-based

industries, largedemand for qualifiedengineers

Research laboratoriesadding value toglobal outsourcing.

Over 70 per cent ofthe total populationlives in rural areas.

Housing shortage isexpected to increaseto 26.53 million units by2012 and requires aninvestment of US$ 877million.

Shift from rented to

owned house.

Easy access tofinance.

Growing demand for housing


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In union budget 2010-11 , finance minister made followingannouncements

Allocation of urban development to beincreased by 75 %.

RBI ( reserve bank of India ) has revised normsfor urban co operative banks for giving loans tohousing and real estate segment.

Now urban bank can use up to 15% of their deposits to provide housing , real estate loans ,earlier it was not so.


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Creating adequate housing stock both on rental and ownershipbasis.

Increase flow of Funds.

Land assembly, development and disposal will be encouraged.

Finance.

Legal and Regulatory Reforms.

Technology support and its transfer.

Development of a Mass Rapid Transit System at the sub-regionallevel around metropolitan cities will be encouraged.


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Growth of services and organized retail,contracting households rising income levels , easilyavailability of home loans are growth drivers .

Changing attitude of developers shifting from HIGto LIG and EWS where the actual demand lies ,and ultimately filling countrys requirement .

Government plans to spend 350 billion dollarsunder 11 th plan in infrastructure.


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Development of tier 2 and tier 3 cities further addto development of real estate sector.

Development of special economic zones , not onlycontributing to exports , promotion of industry,employment and social welfare.

On way of becoming third largest real estatemarket by 2020.


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past & future of real estate in india

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