The Indian economy has witnessed robust growth in the last few years and is expected to be one of the fastest growing economies in the coming years. Demand for commercial property is being driven by India's economic growth.
The sector is not only the biggest contributor to gross domestic product (GDP) of the country but is also the fourth largest sector in terms of foreign direct investment (FDI) inflows in the country. The two main reasons responsible for boom in the real estate industry in India include liberalisation of Government policies, which has decreased the need for permissions and licenses before taking up mega construction projects and the expanding industrial sector.
Urbanisation and increasing household income are some of the major factors that influence demand for residential real estate and growth in the retail sector.
The Indian real estate market size is expected to touch US$ 180 billion by 2020. Infact, the demand is expected to grow at a compound annual growth rate (CAGR) of 19 per cent between 2010 and 2014, with tier I metropolitan cities projected to account for about 40 per cent of this.
Growing infrastructure requirements from sectors such as education, healthcare and tourism are providing numerous opportunities in the sector. Further, India is going to produce an estimated two million new graduates from various Indian universities during this year, creating demand for 100 million square feet of office and industrial space. In addition, presence of a large number of Fortune 500 and other reputed companies will attract more companies to initiate their operational bases in India thus, creating more demand for corporate space.
Foreign investors are looking forward for investment in Indian real estate industry with the dollar appreciating in value compared to the rupee in the recent times. Construction development sector (including townships, housing, built-up infrastructure & construction-development projects) has attracted a cumulative FDI worth US$ 21,765.55 million from April 2000 to November 2012. FDI flows into the construction sector for the period April-October 2012-13 stood at US$ 691 million, according to the Department of Industrial Policy and Promotion (DIPP).
India needs to invest US$ 1.2 trillion over next 20 years to modernise urban infrastructure and keep pace with the growing urbanisation, as per a report released by McKinsey Global Institute (MGI)-India's urban awakening.
Some of the major investments in the Indian real estate sector are: