In the last two decades India has outperformed and shown a healthy rate of GDP growth rate of more than 7% annually. The major contributors of this healthy growth rate are industries like the I.T., BPO and client servicing industries. This has also made India one of the favourite destinations for Foreign Direct Investors (FDI). As per the latest report by United Nations Conference on Trade and Development (UNCTAD), India has become the third most popular FDI destination in world with staggering figures of US$ 1.74 billion in the month of November 2009 (Maps of India, 2010). All of this has directly affected the real estate industry in India. The sector witnessed an astonishing 35% growth rate in 2009 and estimated worth US$ 15 billion investment came in, making this industry a gold mine for domestic as well as foreign investors. The calculated Real Estate demand for the IT sector in 2010 was projected at 150million sq.ft. within the metropolitan cities of India. As per the growing business needs and requirements, most of the fortune 500 companies are looking to open their Head offices in India which has scaled the demand of premium and luxurious office space.
India Real Estate is also attracting a lot of domestic and international investors because of the high YOY (year over year) returns on investments. As per a very recent study carried out by Makaan.com, property prices in India have increased by an astonishing 18.6% in June’10 when compared to last year’s prices (Property Intelligence by Makaan.com, 2010). The high growth of Indian real estate compared to western markets, has attracted a lot of attention of investors from all around the world. In the scenario of the global melt down, it was the Indian real estate market which was affected least in the Asia Pacific region and turned out to be the fastest recovering market out of all (www.indianrealtynews.com, 2010).
Due to the recession, the luxury market took the major hit but it had again started picking up. As per the latest reports, Singaporean luxury resorts chain Banyan Tree is very much interested in investing in India and is already in talks with a few resort owners in India (Financial Express, 2010). According to the United Nations World Urbanization Prospects report, 914 million Indians will live in cities by 2050, compared to 300 million now. This clearly shows the upcoming opportunities and demands for the real estate market in coming years.
The major hurdles and roadblocks for Indian real estate market are the slow bureaucratic system and the involvement of red tape in it (corruption). This whole issue plays the vital role in slowing down the development of the real estate industry. For instance, in city of Mumbai (considered as the financial capital of India), there is a multi stage certification system which requires around 50 various certificates from various government authorities from the time of commencement of the proposed work, to completion of the work. The duration to get these certificates normally involves a time frame ranging from 24 months to 36 months. This slow process delays the projects from its schedule date of completion and sometimes prices are also hiked artificially for a short period of time (DEVITA SARAF, 2010). At the same point of time, corruption in the system threatens many FDI’s from investing in the Indian Economy, which is therefore considered a loss to the industry. India’s ranking in the corruption list is 84, which itself is a big concern, not only for the real estate industry but also for India’s entire economy, as it creates a bottleneck in the path of the economy’s success (Indian Express, 2009). Despite all these problems, one can’t deny the fact of India’s booming real estate market and its success story. India’s booming economy is repairing as well as advancing at a fast pace and bearing in mind it is a developing nation, one can look for the opportunities and solutions for the hurdles prevailing on the way.