Real Estate on the recovery path.

One of the key indicators of economic activity is Commercial real estate transactions, which is showing first signs of stability after a free fall during the early part of this year. In my view, the market shows initial signs of holding on with possibility of prices not sliding further. This is certainly not a recovery as yet, but at least we can say the downturn has been arrested. Most Real Estate companies are getting enquires showing signs of demand trickling in. It is certainly a wait and watch scenario to gauge demand sustainability.

An initiative taken by many companies during the stagnating capital values and sales slowdown was investing in technology that would help them to manage resources better, to achieve optimum productivity, to access information effectively. The End-to-end solutions that manage diverse projects across different locations were slowly being. ERP vendors were seeing increased enquiries pushing them to develop tailored solutions targeted at mid-market realty firms.

The market is looking towards an upward slope. We have the likes of Global real estate giant IREO pumping in $500 million in various infrastructure projects in India over a period of seven years. The organization is among one of the largest investors in the country’s real estate sector. They have already invested $1.5 billion and are still having another $500 million available in cash for further investments in our projects. The company currently has 13 projects and is in the process of constructing an IT SEZ (special economic zone) in Pune.

Emaar Properties in collaboration with MGF Developments is planning to invest in India more than $12 billion over the next four to five years. Out of the total investment, $3bn-4bn will be invested from foreign direct investment. The alliance will make investments to bring real estate to global standards in residential, hospitality, commercial and retail properties, education, healthcare, information technology parks and special economic zones across the country.

In my view, the real estate plays an extremely significant role in India’s Economy. Almost 5% of the country’s gross domestic product (GDP) is contributed by housing alone and an unit increase in expenditure in this sector has a multiplier effect and the capacity to generate income as high as five times the increase in expenditure.

Certainly feel that Real estate in India has been characterized by an increasing presence of a large number of public companies, along with the opening up of this sector to foreign direct investment (FDI) and private equity firms. This has increased the discipline and accountability of businesses undertaking large-scale real estate developments. On demand, Indians have an innate propensity to own homes. This, with rising income levels following India’s rapid growth, has resulted in a phenomenal increase in the demand for homes.

The rising prices real estate in large cities has caused a number of offshore companies setting up operations in India to expand into smaller cities, resulting in a substantial increase in demand. Lastly builders and developers have mainly focused on high-end housing projects in large cities. The recent economic slowdown has meant large stock of unsold inventory. They have, therefore, shifted focus on developing projects aimed at medium-income, middle-class households. The fundamentals of the sector are good and its growth should continue in the foreseeable future