Advantages of investing in India

Real estate investment in India would sure be the most profitable investment! The time is now in case you are wondering when to invest. It’s there right on your face- every new shopping mall, every upcoming residential township, all those colossal corporate and software parks etc. etc.

Real Estate Market Potential

•Profile of the Indian middle class

•Share on the real estate market in India: 80% (residential)

•Household size: 1.6 million

•Income per year: Rs.40 lakhs or US $100,000

•Growth rate per year: 14% and likely to cross 3 million very high income households by 2010

•Population below 35 years: 65% of the total (700 million)

Real Estate Market demand

Presently there is a demand and supply gap due to rising income levels, increased purchasing power and shift in mass consumption trends to luxury goods, entertainment, lifestyle modification and real estate. It has been forecasted by Goldman Sachs that Indian economy will be larger than Japan by 2030 and third largest after China and US by 2050. According to the 10th Five year Plan (2002 to 2007) there is a 4.5 million gap in supply of residential properties in India if taken on a yearly basis and nearly 22.4 million residential units in total. With an annual growth rate of 30% in real estate market this is expected to touch base nearly 50% within the next 5 years. Analysts forecast that demand for additional commercial development alone will reach 63 million square feet across the country by 2009.

Foreign direct Investment in the realty sector in India

With liberalization since 1991 and the Indian government welcoming foreign investors with huge tax concessions and open economic policies FDI in real estate is increasing its pace in the investment scenario. One prominent example in this regards has been Goldman Sachs which has invested in a $68 billion project! This takes India a notch higher in the global market. India today has created an edge for itself over the other countries for its highest ROI on real estate-steady 10% to 12% returns. Example- 30% of major real estate investment come from NRI s in Mumbai.

Hottest destination for investors

According to Jones Lang LaSalle’s annual Investor Sentiment Survey India’s Mumbai, Bangalore and New Delhi have emerged as top three choices for real estate investors in Asia last year (2005). Volume and price rationalization will be the key drivers for real estate demand in the future.

Conclusion

The future has the brightest prospects in terms of volumes and returns for real estate investment in India. The focus on big international projects like airport expansion, hotels, hospitals, corporate parks etc. will surely lure the venture capitalists and NRI s in a major way. The entry of REIT (Real Estate Investment Trusts) and REMF s (Real Estate Mutual Funds gives promising hope to the investors. So happy investing!

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