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Dlf- Real Estate Marketing

Dlf- Real Estate Marketing

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Published by Chirag Thakwani

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Published by: Chirag Thakwani on May 05, 2011
Copyright:Attribution Non-commercial


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The Indian real estate sector is witnessing a quiet revolution, owing to a flourishingeconomy and a positive government attitude, which includes a liberalized foreign directinvestment regime. The realty sector, which is growing at an amazing 35 per cent, isestimated to be worth US$ 15 billion. It is also expected to grow at 30 per cent annuallyover the next decade, attracting foreign investments worth US$ 30 billion. This double-digit growth is mainly attributed to the off-shoring business, including high-endtechnology consulting, call centres and software businesses. The IT and ITES sector isestimated to require 150 million sq ft of office space across urban India by 2010. Thiswill have a domino effect since for every square feet of developed office area; around 10sq ft of residential space needs to be developed for accommodation of the employees.Almost 80 per cent of real estate developed in India is residential space, the restcomprising of offices, shopping malls, hotels and hospitals. According to the Tenth FiveYear Plan, there is a shortage of 22.4 million dwelling units. Thus, over the next 10 to 15years, 80 to 90 million housing dwelling units will have to be constructed with a majorityof them catering to middle and lower income groups.After agriculture, the real estate sector is the second largest employment generator inIndia and contributes heavily towards gross domestic product (GDP). Five per cent of thecountry's GDP is contributed to by the housing sector. In the next five years, thiscontribution to the GDP is expected to rise to 6 per cent.1
The real estate sector is also responsible for the development of over 250 other ancillaryindustries such as cement, steel, paints etc. A study by rating agency ICRA shows that theconstruction industry ranks 3rd among the 14 major sectors in terms of direct, indirectand induced effects in all sectors of the economy. A unit increase in expenditure in thissector has a multiplier effect and the capacity to generate income as high as five times. If the economy grows at the rate of 10 per cent, the housing sector has the capacity to growat 14 per cent and generate 3.2 million new jobs over a decade.
Rising income levels of a growing middle class along with increase in nuclear families,changing demographics of home buyers (the average age of a new homeowner in 2006was 32 years compared with 45 years a decade ago), and easy housing finance has led toa boom in the housing sector.According to 'Housing Skyline of India 2007-08', a study by research firm, IndicusAnalytics, there will be a demand for over 24.3 million new dwellings for self-living inurban India alone by 2015. Consequently, this segment is likely to throw huge investmentopportunities. In fact, an estimated US$ 25 billion investment will be required over thenext five years in urban housing, says a Merrill Lynch report.Furthermore, a booming Indian economy has had a cascading effect on demand for commercial property to help meet the needs of business, such as modern offices,warehouses, hotels and retail shopping centres.Growth in commercial office space requirement is led by the burgeoning outsourcing andinformation technology (IT) industry and organized retail. For example, the organizedretail industry is likely to require an additional 220 million sq ft by 2010.Moreover, growth is not restricted to a few towns and cities but is pan-India, coveringnearly all tier I and tier II cities. Market analysis pegs returns from realty in India at an2
average of 14 per cent annually with a tremendous upsurge in commercial real estate onaccount of the Indian BPO boom. A significant demand is also expected as theoutsourcing boom moves into the manufacturing sector. Further, the housing sector has been growing at an average of 34 per cent annually, while the hospitality industry has been growing at around 10 per cent over the last couple of years.Apart from the huge demand, India also scores on the construction front. McKinseyreport reveals that the average profit from construction in India is 18 per cent, which isdouble the profitability for a construction project undertaken in the US.
With the economy surging ahead, the demand for all segments of the real estate sector islikely to continue to grow. The Indian real estate industry is likely to grow from US$ 12 billion in 2005 to US$ 90 billion in by 2015.3

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