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India is considered the birthplace of the number zero.

In recent years, however, the subcontinent has hit the headlines with rather larger numbers. Home to roughly 1.1 billion people, India is the second most populous country after China and is expected to overtake it by 2030. Its economic transformation over the past decade has pushed up real GDP growth to an average of 6% p.a. since 1992.

Indian realty sector will grow from US$ 12 billion in 2007 to US$ 90 billion by 2015.

The size of the real estate industry in India is estimated to be around $12 billion. And iti s continuously growing at the rate of 30% for the last few years. Almost 80% of real estate developed in India is residential space and the rest comprises of office, shopping malls, hotels and Hospitals. The main reason for growth is mainly due to off-shoring business, including high end technology consulting, call centers and software programming houses which covers 15 million square feet of real estate development. With an ever increasing influx of funds, the real estate sector in India is growing bigger. In the first half of 2007, there will be atleast 20 more funds making an entry in India while 35 big ticket foreign funds have already made their presence in India. Northbridge Research expects that the Indian
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realty sector will grow from US$ 12 billion in 2007 to US$ 50 billion in 2010 and to US$ 90 billion by 2015. Global funds like Carlyle, Blackstone, Morgan Stanley, Trikona and Warbus Pincus are sitting on a total corpus of US$ 12-15 billion. Even the most aggressive retailers expands their business creates a huge demand for real estate.

The real estate development in India focuses on two primary areas : Retail and Residential. Northbridge research has predicted growth rate of 20% in the organized retail segment by 2010. Lot of foreign players are attracted to invest in real estate market in India. Examples are : Morgan Stanley Real Estate has invested $68 million in mantri Developers private limited, a private Banglore based Real Estate Developer.Vancouver-based Royal Indian Raj International Corporation (RIRIC) will invest $2.9 billion in a single real estate project named Royal Garden city in Banglore over a period of ten years and the retail value of project is estimated at $8.9 billion.

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Table 6.1 : Market Players

MAJOR MARKET PLAYERS


Real Estate Developers Construction Companies Corporate Houses Property consultants Real Estate brokers
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Housing finance companies Banks & Financial Institutions Architects Vendors & Suppliers

Table 6.2 : Industry Profile

SIZE
Real Estate and Construction is a $12 billion (by revenue) industry in India.

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The industry has seen a rapid growth in the past few years.

STRUCTURE
In India, Real Estate sector is fragmented market - Most real estate developers have only a local or regional presence - There is participation of large corporations in these sector - India has higher margins (20%) as compared to the developed markets (5-6%). Institutional finance in Real estate is just beginning. Various foreign Real Estate and Finance companies like GE Commercial Finance, Tishman Speyer, Ascendas and Farallon Capital have entered the Indian market.

6.5 GROWTH RATES


Real Estate sector is growing at an annual growth rate of 30% Returns in India range between 12-15% compared to 3-4% in the advanced countries. Northbridge research estimates that the 70% of the new construction will be for the IT sector.

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Figure 6.1 : REAL ESTATE DEVELOPERS PLANNING EXPONENTIAL GROWTH

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Figure 6.2 : Indian Real Estate market Growth Drivers


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Figure 6.3 : Growth Potential and Expected Trends