Growth and investment in real estate in India: a case study
The Indian economy has grown rapidly over the last 15 years, which has contributed to the exponential growth of real estate across India. According to a recent article by the Indian government, the real estate market in India accounts for a whopping 11% of the national GDP. Ever wondered why there is such rapid growth in this industry, this case study provides a snapshot of the contributing factors in your favor.
The population of many large cities in India has grown tremendously over the last decade. There is a colossal demand for residential and commercial properties in Tier 1 and Tier 2 cities. Some of the top 5 residential cities in India are Delhi-NCR, Mumbai, Bangalore, Chennai and Pune. There are many key drivers for this exceptional growth and investment in real estate in India.
a) The Government of India has set out a roadmap for economic reforms to accelerate infrastructure development by inviting investment from domestic and international players by creating a favorable atmosphere for business and investors. Also, the easing of monetary economic policies by lowering interest rates so that mortgage loans from banks to buyers are readily available and affordable.
b) Increasing urbanization and large-scale migration of the population from rural to urban areas in search of employment, higher incomes and better living conditions, which has led to an increased demand for residential and commercial properties in the area .
c) From an investment point of view, since stocks and mutual funds are extremely volatile depending on market conditions, more people including the middle class income group, non-resident Indians are investing in real estate than They offer high returns on both short-term and long-term investments due to rising property prices. Investing in residential property also gives residential buyers the option of a second income to supplement their monthly income.
d) Entrepreneurial activity and the creation of IT development centers, BPOs, large-scale manufacturing units in the automotive and engineering sectors by multinationals has stimulated the growth in the need for commercial office space. As more and more multinational companies settle in cities, new lines are opening up for general growth and investment in the real estate industry. These industries bring many job opportunities to the system. More jobs mean higher income levels, higher purchasing power for property buyers, which is also another factor for real estate investment and growth.
e) Indian state governments have given the green signal to develop residential townships, shopping malls, shopping malls near industrial hubs, IT hotspots inviting national and international investment for construction of connectivity bridges, state highways , rail networks to facilitate commuting traffic. Many large residential and commercial projects have sprung up to meet the growing demand for housing for real estate.
f) Increasing real estate growth are government policies in preparation to allow FDI (foreign direct investment) in the retail, insurance and health sectors of the economy which are likely to see real estate development and investment opportunities in India for many years to come to come