Trends and Statistics of the Indian Real Estate Industry
The real estate industry is the 2nd largest employer in India. Agriculture is the largest employer. This industry contributes 6.3% to India’s GDP. The value of this industry is currently estimated at USD 67 billion. The figure is estimated to touch USD 180 billion by 2020. Foreign Direct Investment (FDI) in this sector is expected to grow to USD 24 billion in the next 10 years from the current USD 4 billion. The real estate market of India is one of the fastest growing real estate markets in the world. The growing income has enabled the Indian middle class to take up real estate as an investment class. This has fueled a tremendous growth in demand. The sector creates 7.6 million jobs. This figure is expected to grow to 17 million by 2025.
There are four sub-sectors of the Indian real estate industry – housing, retail, commercial and hospitality. The housing industry has seen great demand over the last decade. It has been a market which has seen shortfall in supply consistently. However, that is changing now. The hot markets of Gurgaon and Noida in NCR, Mumbai, Bangalore, Hyderabad, Chennai, Pune, Indore and some other places are kind of stagnating. Prices are not appreciating as they have reached almost tipping point. The rent yield of Indian real estate is at 2.7% compared to 4.7% in US and 4.5% in Japan. This shows that the Indian real estate was overvalued. Now the market is moving away from being speculative and prices are getting more real.
The retail and commercial space demand is originating mostly from metro cities in India. It is expected to see an upward trend albeit in single digits. The business in this space seems to be taking a shift from sales to lease and maintenance. The prime office space segment across the country’s key cities – Mumbai, Delhi and NCR, Pune and Bangalore has seen a fresh supply infusion. In the first six months of 2013, 20 million square feet of office space has been added witnessing a year on year growth of 16%. Hospitality market comprises hotels, service apartments and convention centers. Delhi NCR and Mumbai remain the biggest hospitality markets in India. The hospitality sector is gaining from the increase in tourism. This increase is triggered both by foreign and domestic tourists. Niche areas like medical tourism in India are also gaining in global popularity. The developing and international quality medical facilities in India are enabling this sector.