The drivers for the Indian market to recover will demand real estate

“Even though Europe is reeling under the fallout of the economic crisis and US is showing signs of convincing recovery now, funds are once again being routed towards the Asia-Pacific region, where India and China top the investment destinations. The real estate implications are obvious and compelling…”

-Jones Lang Lasalle Meghraj

Unlike other markets, India’s economy has recovered very fast and the economy is now ready to take on a new face. In the future, there will be a  shortage of approx. 26 million residential units in urban centers, which means the real estate market is still in the baby stages of its growth.  High rises are becoming very popular because of the demand for housing and thus the market is drastically changing.  And example of this is IREO Victory Valley, the largest tower in North India in Sector 67 at 51-stories.

ROBUST AND AGILE

Real estate in Asia-Pacific, especially in India, is on a definite path of recovery. Strong and dynamic policies would ensure momentum, says ARCHANA SINHA

The Asia-Pacific region continues to move in a forward motion as far as real estate is concerned and the trend is going to continue, according to the recent survey conducted by some top-ranking companies.

The Global Market Perspective report released by Jones Lang LaSalle says that the region was quickest to recover in 2010 and the outlook seems positive.

In fact robust bounce back was recorded last year itself when much of the world was still sluggish. Abhishek Kiran Gupta, Head – Research & REIS, Jones Lang Lasalle Meghraj says, “Even though Europe is reeling under the fallout of the economic crisis and US is showing signs of convincing recovery now, funds are once again being routed towards the Asia-Pacific region, where India and China top the investment destinations. The real estate implications are obvious and compelling. Both countries are heavily populated with growing economies that are spawning growth in the manufacturing, telecom, pharmaceutical, agriculture and logistics sectors. Each of these sectors will require to be housed in properties besides housing itself.”

Picture taken from here

Akash Deep Jyoti, Head, Corporate & Infrastructure Ratings, CRISIL Ltd, says, “India’s realty sector has maintained strong resilience in the recent financial crisis, despite slowdown in demand. Demand is expected to recover sooner in India, than in USA and the European Union, spurred by strong economic revival.”

Sachin Sandhir, Managing Director and Country Head, Royal Institutions of Chartered Surveyors also has similar views. He says, “The country is looking at a shortfall of close to 26 million residential units coupled with huge amounts of urbanisation. Close to 500 million people would live in cities over the next decade, coupled with an increasingly affluent middle class with more disposable income and aspirations.”

Sandhir adds, “Of late there has also been an uptake in domestic real estate fund activity. With faster returns and better yields on investment in the range of 25-30%, most Private Equity funds are looking to place their money in residential projects.” Robust real estate demand and the ability of various cities to attract high levels of FDI, which are capable of generating high rates of return are also favorable factors influencing investment, points out Sandhir.

There are other reasons as well, developers point out. Brotin Banerjee, CEO and MD, Tata Housing says, “There is an overall boost in the residential real estate market with sustained GDP growth, rising affordability, rising mortgage penetration and increasing foreign and domestic investments.” Read more


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