Tuesday, August 12, 2014

Exploring the Factors Influencing the Growth of the Indian Real Estate

Since economic liberalization and the ushering in of the Information Technology (IT) Sector, the Indian real estate has come a long way. Several factors have contributed towards the development. Read on to know more. 

While the real estate sector still tries to gain an industry status, the new government has already done its bit about the growth of the real estate market in India. From introducing real estate bills to implementation of the
Bangalore Skyline
REITs, the Indian real estate is all set to witness a new change with a bated breath.

All major Indian cities have come up in a big way within the realty market and the overall real estate sector continues to grow till date. The rapid growth of economic hubs such as Gurgaon, Noida and Pune has led to a boom in the infrastructure development of these cities. As more and more businesses are making investments in India, there has been a surge in the development of commercial and hospitality properties apart from the residential ones. In this article, we will mention in detail the existing trends in real estate sector in India at present.

Types of Real Estate 
Real estate projects which are being developed in India are of three different—residential, commercial, retail and hospitality. Commercial properties comprise apartment blocks, warehouses, office buildings, shops etc. The size of commercial properties tends to vary according to the type of commodities sold within them. Offices are usually rented on lease. Office buildings which offer the latest amenities usually charge a higher amount as rent.

On the other hand properties meant for hospitality comprise hotels, restaurants, guest houses, clubs, cinema halls etc. These happen to be the places where people come to relax and take a break from their grueling schedule. Buildings such as warehouses, manufacturing units and distribution centers are also commercial properties but are usually situated at the outskirts of the city. These areas are specifically developed as Special Economic Zones (SEZ) with greater facilities as compared to residential areas.

Factors behind the Growth of Real Estate Sector
Some of the major factors that led to the growth of the Indian real estate are mentioned below:

Growing Economy
The Indian economy has shown impressive growth over the last few years, which has attracted investments from global giants in different sectors such as IT, automobile, pharmaceuticals etc. This in turn has led to great rise in demand for infrastructure development of commercial properties in order to meet the needs of the investors. In an article published by the Economic Times in 2013, it was mentioned that real estate sector contributes 6.3% to the national income and can create around 7.6 million jobs at present. The market size of real estate industry is expected to reach $ 180 billion by 2020.

The rising purchasing power of the growing upper middle class has also created great demand for luxury apartments and villas with ultramodern facilities. That led to an expansion of hotels, resorts and restaurants. A growing economy, and need for improving existing industrial infrastructure has been one of the major factors behind the growth of the growth of the industry.

There are 50 Indian cities with a population of more than 1 million. The expansion of mini-metros and satellite cities, and the shift of people from rural to urban areas have created a need to improve the roads, power and water facilities in residential as well as commercial properties. It is widely believed that as many as 600 million people will reside in cities by 2030.

The improvements taking place in transportation systems, buildings, mobility of labour and rising standards of living has had an impact on the property prices. The rapid rise in the number of people with white collar jobs has in turn created greater demand for luxury apartments and villas with ultramodern facilities.

Government Policies
An IT Park in Gurgaon
At present, the Indian government allows the entry of 100 FDI to flow into development projects such as townships, hospitals, hotels, resorts, commercial buildings, educational institutions as well as residential apartments. Industry analysts have stated that investments worth $ 1.8 billion are in the process of being raised. The change of government in the center has raised expectations that it will come up with policies which ensure affordable housing and fast-track the approval process of the pending projects and set up a regulator for real estate sector.

Industry experts are of the opinion that current issues such as high inventory costs, declining sales, and increasing debts would be solved out as a result of some changes in the policies of the central government in the field of housing and infrastructure development.

The changes in economic policies of the government, the migration of people from rural to urban areas and the growth of industrial and residential townships in the future are likely to lead to long term growth in real estate sector. In case, you want to invest in property, you need to go through the latest trends which are coming up in the property market of the city where you would like to invest your money in. A wise selection of property will ensure that you get the best returns on investment when you sell it in the long run.


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