52.Real Estate

The Indian real estate sector plays a significant role in the country’s economy. The real estate sector is second only to agriculture in terms of employment generation and contributes heavily towards the 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. Moreover, the real estate sector is also responsible for the development of over 250 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. The real estate sector in India has observed a quite revolution over the past decade thanks to India’s booming economy which has led to an increased demand for both commercial and residential space.

According to a study by a leading industry chamber, the Indian real estate sector is expected to grow at 30 per cent over the next decade, attracting foreign investments worth US$ 30 billion. The double-digit growth is mainly attributed to India’s booming off-shore business, including high-end technology consulting, call centres and software businesses. The IT and ITES sector alone is estimated to require 150 million sq ft of office space across urban India by 2010. Organised retail is also responsible for the growth in commercial office space requirement.
The organised retail 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, covering nearly all tier-I and tier-II cities. Almost 80 per cent of real estate developed in India is residential space, the rest comprising of offices, shopping malls, hotels and hospitals. According to the Tenth Five-Year-Plan, there is a shortage of 22.4 million dwelling units. Thus, over the next 10 to 15 years, 80 to 90 million housing dwelling units will have to be constructed with a majority of them catering to middle and lower income groups.