subject: How Has The Real Estate Sector In India Evolved Since 2000? [print this page] The real estate sector in India was set to grow with studies after studies pointing to the increasing demand of the various types of properties. With the opening of the economy for the multinational and increasing diversity of economic activities, there was a need to develop housing, retail, office, institutional and industrial spaces for the new and the old generation businesses. Let us have a brief walk down the memory lane to know what all factors favoured the emergence of real estate and how it grew since the last one decade.
Ever since the opening of the economy, there has been an economic growth rate averaging to about 8 percent per annum. Large pool of skilled manpower in almost all domains made India an attractive proposition for large MNCs to make it a hub of their regional and global operations. Further, as the Indian middle income class moved towards further prosperity and its disposable income grew, there was need for quality housing facilities with better infrastructure. This demand was suitably met with the entry of professional builders, supporting help from banks and financial institutions, favourable government policy and legal rulings and improvement in infrastructure.
The biggest impetus has been given by the entry of MNCs and the growth of IT and ITES related businesses which have been the largest consumers of the office space. Tier I cities and their adjoining areas have seen the largest spurt in the demand and delivery of the real estate projects of varied types. Tier II cities have also seen good penetration of the projects but the Tier III cities have been laggards in this respect. There have been government initiatives and encouragement to develop this tier of cities as well.
There has also been the growth of hospitable industry with increasing focus on tourist-centric real-estate development including hotels and other such categories of living spaces. The retail segment has also been pushed for development but there is greater impetus expected to be delivered when the retail FDI participation is permitted by the government. It is expected that with the entry of big store chains, the customers will have even greater choices of products and the demand for retail space will grow even further.
The discussion on evolution of real-estate sector in India is not complete without discussing the residential segment. There has been focus on providing both the affordable living options for the middle classes, the cheap accommodations for the Economically Weaker Sections and even for the niche luxury segment. Group housing societies, independent floors and independent homes are some of the most common development projects by reputed builders all over the country, covering Tier I, II and III cities. There have been many innovative variations in the key features of these projects catering to respective target markets.
There is now some slowdown in the growth of realty sector, especially in residential segment because of increasing prices, tightening home loans and some other factors which see shrinking demand.
