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Real Estate & Infrastructure Market in India

"The new Indian government. . . reasserted one of its core economic priorities to address the country's infrastructure deficit. . . infrastructure to get multi-year boost,"

As real estate is a business with long development cycles – from planning to construction takes several years – now is the time to plan for these changes. It singled out the move to allow banks to raise long-term bonds for lending to longer gestation infrastructure projects, and making it more attractive by giving concessions on the mandatory bond holdings and cash reserve requirements, as one of the biggest positives.

"It is the measures to ease funding that are particularly noteworthy and will be critical for driving the new investment cycle,"

emerging opportunities in real estate

Apart from Rs 600 billion in direct infrastructure investments, special economic zones, new ports and subway projects, the budget presented by Finance Minister Arun Jaitley also included major announcements on urban infrastructure and road building, it said. Additionally, measures on the REIT (real estate investment trusts) will also be supportive to the sector, while opening up the construction sector for greater foreign investor play.

It can be noted that infrastructure is estimated to require over $1 trillion in investments during the 12th Five-Year Plan period ending 2017. The sector has, however, suffered in the recent past due to host of reasons, including difficulties in getting project clearances, some judicial interventions and also higher interest rates.

Real Estate & Infrastructure Industry Brief

India has witnessed a steady growth in infrastructure over the recent years, and foreign investors have shown keen interest in investing in this sector. The Planning Commission has envisaged a trillion dollar investment in infrastructure between 2012-13 and 2016-17, and expects half of the money to come from the private sector. The sector is important for the Indian economy, accounting for 37.9 percent of the country’s industrial output.

The long-term view for the Indian real estate industry is quite positive since its fundamental demand drivers - increasing urbanisation, favourable demographics, growth of the services sector and rising incomes are intact. India’s favourable demographics and strong economic growth make the country an attractive place for property investors, as the demand for property is determined chiefly by business development and demographic trends.

Within a short span of time the sector has evolved from a highly fragmented and unorganised market into a semi-organised market with a large number of listed companies. According to various sources, the size of the Indian real estate market was estimated at approximately US$ 16 billion in 2006 and is estimated to reach US$ 180 billion by 2020 registering a CAGR of approximately 19%.

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