Real Estate Boom in India

There is an unprecedented real estate boom in parts of India. These are the National Capital region, certain parts of Bombay-New Bombay-Pune and outsourcing Mecca - Bangalore. It is to a great extent, driven by the huge growth of the IT (Information technology) and BPO (Business Process Outsourcing) industry. As the IT industry grew, employees got onsite (literally - at the client site, as opposed to offshore) opportunities. Onsite typically meant being paid in US dollars and thus many employees earned a lot of money.

The demand for plots of land went up with the boom in industries. But with the cost of a 30X40 ft plot plus home going for the equivalent of 5 million rupees in a good residential area, apartments soon came into favor.

The buyers earned a lifestyle equivalent to the lifestyles abroad, and they had the capacity to pay. This reduced the "matchbox" apartments on offering and has spawned a host of self sufficient complexes. Soft interest rates on home loans, a tax incentive on home loans and thegeneral growth mode of the economy are other factors driving the real estate boom.
New apartment’s complexes have recreation facilities, basement parking, security, power back up, good lawns and even swimming pools, all of which are very difficult to get when one goes in for an individual plot. In real estate website Placidhomes.com people can add properties and also can search properties.

When every builder began to offer these, the bigger ones began to offer multiplexes, shopping complexes and schools. Not content with differentiation, it is now snob value (at a premium) - Complexes modeled on resorts, European looks, vast open areas, pools lined with Italian marble are the latest fad these days. While this is a good thing, in the recent past, real estate in Bangalore has reached crazy levels of prices.Even now, a significant percentage of the buyers are genuine ( not speculators) buyers who intend to stay in the apartment they book. But when there is a genuine demand, speculators can’t keep off.

Some buyers take advantage of the spiraling prices (driven by the builders to a great extent)to book say, 3 apartments when they want just 1. As the price increases, they sell off the first one, and then the second effectively getting their third (and the one which they intend to own) apartment nearly free of cost.

At the recent launch of a highly advertised complex in Bangalore, about 2000 apartments were sold in 2 days flat and there was a congregation of about 6000 people waiting to book apartments. Among those who booked apartments, many just got to choose the floor and pay the booking amount. No real apartment has yet been allotted to them. But they don’t care. They will get to own a house in "Super duper complex" which will be finished in 2007-08.
Considering the pathetic infrastructure in Bangalore, it is surprising why the rates are so high. Just outside these posh apartment complexes and layouts (local name for plots sold for buyers to build their own houses), roads are broken, small and there is no sign of any public transport at all.Driven by positive growth in the economy, real estate in India is booming.

The year 2006 started on a promising note when the Government of India opened the construction and development sector in February 2006, and allowed 100 per cent foreign direct investment (FDI) under the 'automatic route' in order to spur investment in the vital infrastructure sector.

The development of real estate in India focuses on two primary areas: retail and residential. The global real-estate consulting group Knight Frank has ranked India 5th in the list of 30 emerging retail markets and predicted an impressive 20 per cent growth rate for the organized retail segment by 2010. The organized segment is expected to grow from a mere 2 per cent to 20 per cent by the end of the decade, it said.

Key trends of the real estate boom :

A report on real estate said that the number of malls in Mumbai, Bangalore, New Delhi, Hyderabad, Jaipur, lucknow and Pune was expected to grow to about 250 by 2010 as against 40 now. In terms of total area, there was 12.40 million square feet (mnsqft) of mall space available in these cities, the report said quoting a survey by Knight Frank India.

As the competition in the market is intense, builders are going out of their way to be different. Specialized malls have become the order of the day. Gurgaon, on the suburbs of New Delhi will soon have an auto mall, while Bangalore is about to get an exclusive furniture mall. Gurgaon is set to get the biggest mall of the world — a large US$ 89.78 sq ft sprawling property that is being developed by DLF Universal. It will be known as Mall of India.

Similarly in the home segment, which is driven by the availability of easy home finance, most builders are trying to woo investors with interesting features, each more tempting than the other.

Closed-circuit television and earthquake proofing are expected as standard features in most up market blocks. Ever shine Builders, for instance, is providing a range of facilities from modular kitchens to piped gas and Internet connections. Some of its flats are even fully furnished.



Indian Real Estate News reported that nine key trends were depicted which will shape the business landscape of the Indian real estate in another 3-5 years:
- a shift in the project magnitude getting bigger
- great geographic de-concentration as the focus of developers shifts from metros to smaller cities
- emergence of some national level developers
- consumer acceptability towards leasehold residential properties will increase significantly
- industry will witness a shift from Land Focused transactions to Development transactions
- upward movement of construction giants on the value chain
- emergence of a stronger real estate capital market is imminent
- a correction in the supply formats when the Indian real estate market becomes more competitive and organized.

The IT and ITES sector are expected to continue growing at over 30%. An additional 367 million sq ft of office space will be required between now and 2012-13 to meet demand. In the unlikely scenario that there is a downturn in these sectors, the requirement for additional office space will decline to 256 million sq ft by 2012-13.

Retail real estate is booming too. By the end of 2008, 66 million sq ft of retail space will be added in the eight largest Indian cities, and 13 million sq ft in the next seven largest cities.

According to the Ministry of Tourism, by 2010 India will have 2.9 million hotel rooms compared to today’s 1.2 million. According to CRIS-Infac estimates, demand for hotel rooms will grow at a compounded annual growth rate of 10% over the next five years.

India will also need 10 million new housing units by the year 2030, according to a projection by Asian Development Bank.Real estate development in coming years would be boosted by release of land by public sector undertakings and government projects focusing on urban development, the study added.



visit http://www.placidhomes.com for all your property needs!!!