Posted By:Infra Bazaar
Real estate sector is supposed to grow in India. India’s strong economic growth is one of the major factors that are supposed to drive the growth of real estate sector. The state infrastructure requirement is pushing for the growth. The sector is witnessing heavy inflow in billions by allowing the foreign investors to invest and spike is expected to meet the domestic demands.
The GDP growth in 2016 was around 7.5% and the growth in 2017 is assumed to reach 8%. It is expected that the real estate sector in 2017 would surely shed off the dark clouds and despite of slowdown, the country will pose a brighter picture. One reason behind the improvement could be the “Housing for all Schemes”. “Pradhan Mantri Avas Yojana” is one such mission, where the scheme is to provide housing for all, slum rehabilitation, to promote affordable housing and subsidy for house construction. For the economically weaker section that requires at least 40-45 million housing by 2028 approximately 25-30 million will be built by 2017.
Luxury Housing is another segment that is fast catching up. People are getting attracted towards luxurious living and are inclined towards high end living. HNI’s in India is expected to triple by 2017. The villas, penthouses and apartments with excellent amenities are seeking attention among buyers.
Commercial Segment has changed the livelihood of many people and it is spreading its base in real estate. The growing infrastructure and demands for IT hubs is pushing for the commercial section growth. The manufacturing industries have received propellant at max. Delhi Mumbai Industrial Corridor (DMIC) has shown significant boost in real estate. The retail sector has for sure boosted real estate sector. CAGR (compound annual growth rate) is expected to increase by 8% from USD518 Billion in 2012 to USD850 Billion in 2017. It is expected to absorb around 15 million sq ft till 2017. Domestic Companies and MNC’s have increased in huge number in last few years and is expected that there will be demand for over 90 million sq ft till 2017.
Government has also plans to develop 100 smart cities with sustainable living that will be equipped with good infrastructure and proper system for water, transport, sanitation, power etc. The government has targeted 100 cities to increase the economy and by the end of 2017 they have set a target to allocate INR 70 billion to the budget which will surely propel the growth of real estate sector.
In spite of all the positive indicators the construction sector is reeling under severe shortage of skilled workforce, shortage of construction sand, raw materials, political and policy disturbances are also acting as growth deterrents. The activity in construction sector too appears to be quite slow currently. The prolonged real estate market slowdown has resulted in a lot of unsold housing projects across India. If experts have to be believed demonetization might bring down home sales by at least 20-30% and weaken credit profiles of some top developers.