Real Estate Boom : Is it here to stay or bust?
One of the most important reasons for the growth in the real estate sector is
the expansion of well-organised townships to tier I and tier II cities. Rising
cost of land in urban metros, lack of adequate infrastructure support to back
further growth of metros, on the one hand and on the other availability of large
plots of land and a large pool of educated and skilled workforce in smaller
towns has led to a sharp growth in Tier I and Tier II cities in India.
Even Tier III cities have started to attract investments in the last
couple of years from IT/ITES sectors besides township developers and retail
large format mall developers. Connectivity is getting better in tier I and tier
II cities.
The number of first time buyers have multiplied as the banks
have be come home-loan friendly People today no longer want to stay in a rented
apartment and therefore opts for buying a house and paying for the loan than
paying for the rent.
The demand for houses in the residential sector far
outstrips the supply We are still short by another 20 million units in India The
IT/ITES/BPO sector has not only won us huge foreign exchange but has contributed
to the demand of office and good homes for their employees.
Another big
reason for the boom in the real estate market is the Great Indian Retail
Revolution. On 3 percent of retail is organised in India.97 percent is yet to be
organised. Hence the mushrooming of malls and multiplexes.
As for better
connectivity, indeed this is a vital factor for growth. One has to look at the
Mumbai experience and take cues from it. People travel from Pune, Malad,
Borivilli etc into the centers of Mumbai. This has reduced the pressure for land
space in central Mumbai.The concept of Suburban will succeed in Delhi too once
the metro system and highway vehicle is implemented in the NCR areas.
The real estate sector is a barometer for the economy at large. Growth
in real estate means generation of employment and a boost to the construction
sector. Infact today this sector can compete with the best in the world. Moreso
as we see the advent of SEZs, IT SEZs, engineering SEZs, Auto SEZs are all going
to bring in tremendous amounts of FDI into the country. We will be able to
export more and earn more Foreign exchange for the country.