Indian Real Estate

The Indian real estate sector is witnessing a quiet revolution, owing to a flourishing economy and a positive government attitude, which includes a liberalized foreign direct investment regime. The realty sector, which is growing at an amazing 35 per cent, is estimated to be worth US$ 15 billion. It is also expected to grow at 30 per cent annually over the next decade, attracting foreign investments worth US$ 30 billion. This double-digit growth is mainly attributed to the off-shoring business, including high-end technology consulting, call centers and software businesses. The IT and ITES sector is estimated to require 150 million sq ft of office space across urban India by 2010. After agriculture, the real estate sector is the second largest employment generator in India and contributes heavily towards gross domestic product (GDP). Five per cent of the country's GDP is contributed to by the housing sector. In the next five years, this contribution to the GDP is expected to rise to 6 per cent.

The real estate sector is also responsible for the development of over 250 other ancillary industries such as cement, steel, paints etc. A study by rating agency ICRA shows that the construction industry ranks 3rd among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. A unit increase in expenditure in this sector 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 grow at 14 per cent and generate 3.2 million new jobs over a decade.

Residential market:

The residential sector, which accounts for 75-80 % of the turnover of the entire real estate sector, has been on a high growth path. According to the ministry of housing and urban poverty alleviation, there is a shortage of 24.7 million houses in the country. Rising disposable income and the trend towards nuclear families are some of the factors driving the demand for residential real estate. Another major development within the residential real estate segment is the development of integrated townships. The demand for quality lifestyle and walk-to work concept are some of the drivers of demand for integrated townships that offer commercial, retail, residential, and leisure facilities within a given area. Approximately, 400 townships are expected to be developed over the next five years around 30-35 major cities in the country. So far, the situation in both the office and the residential market has been that whatever is built gets sold or rented.

WAY:

Speculating: This is equal to the speculation in the stock market, when you buy scrip and sell it when it rises. This is the wait and watch approach to realty investing and it requires a fairly good financial background, as you might end up owning homes before you decide to sell them. If you can identify the right property, you can make a lot of money. Speculators are on the rise, with loans becoming easier.

Flipping:

This is the method of buying and selling properties in a short span of time. You just buy the property and when the prices go up, you sell. The advantage of Flipping is that you don’t require vast amounts of money.

Investing:

This is the method of investing and holding on for a longish time. The long term investor always benefits in a developing market. You have to choose your right market; you can find a low market. You should buy undeveloped land and hold on for a long time. Buy cheap, sell dear is the motto. You have to do your homework properly. You will find that successful real estate investors spend a lot of hours studying graphs and charts before investing. Future is unknown and nobody can predict what will happen in a years' time but a good investor can make an informed guess!