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Real Estate: Jan 2012

January, 2012

The Indian economy has experienced robust growth in the past decade and is expected to be one of the fastest growing economies in the coming years. Demand for commercial property is being driven by the country’s economic growth. Real estate contributes about 5 per cent to India’s gross domestic product (GDP). The total revenue generated in 2010-11 stood at US$ 66.8 billion.

Demand is expected to grow at a compound annual growth rate (CAGR) of 19 per cent between 2010 and 2014—Tier 1 metropolitan cities are expected to account for about 40 per cent of this. The foreign direct investment (FDI) up to 100 per cent is allowed with government permission for developing townships and settlements. FDI of up to 100 per cent is also allowed in the hotel and tourism sector through the automatic route. Growing requirements of space from sectors such as education, healthcare and tourism provide opportunities in the real estate sector. FDI of more than US$ 9 billion was infused in real estate in the last decade.

In 2010, over 11 per cent of total FDI in India was in the real estate sector. There have been 110 deals in the real estate space during the period 2001 to the first half of 2011. The top seven cities are likely to account for 70 per cent of total demand for real estate in the education sector.

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