Indian real estate investment policy India Part I
By Thomas` | October 19, 2008
- Opportunities
- Applicable Laws/Regulatory Policies.
- Tax Benefits/ Incentives
- Current Projections in the Budget.
I. INTRODUCTION.
Due to LPG policy particularly liberalized Foreign Direct
Investments (FDI) regime the Indias explosive economic
progress has captured the worlds attention and its property
market has indeed emerged as one of the most appealing
investment destinations for both domestic and foreign
investors.
Indian Real estate is on the high growth path and the boom
is mainly due to mall culture, multiplexes, hypermarkets and
retail sector are growing in India and retail brands from
all over the world are showing their keen interest to even
setup their base in India especially MNCs apart from retail
outlets coupled with rising demand for commercial and
residential boosting the industry. It is expanding its wings
even in remote towns. Leave aside metro cities, smaller
towns have attracted construction activity from big
developers. Shopping malls, skyscrapers and new
infrastructures are shaping new India.
II OPPORTUNITIES
Indian real estate has huge potential demand in almost every
sector especially commercial, residential, hospitality,
healthcare, retail and industrial etc. This is growing at a
dizzying pace of almost 30 percent each year. The bulk of
construction activity - 80 percent is dedicated to housing,
while the rest is commercial, including offices, malls,
hotels and hospitals.
The Real Estate market is projected to grow to US$60 billion
by 2010 at a CAGR of 40%
Several factors are expected to contribute to the rapid
growth in Real Estate
Large demand-supply gap in affordable housing, with demand
being fuelled by tax incentives and a growing middle class
with higher savings. Increasing demand for commercial and
office space especially from the rapidly growing Retail, IT/
ITeS and Hospitality sectors etc.
Investment opportunities exist in almost every segment of
the business as per the estimates of Investment commission
of India particularly in the following sector.
Over 20 million new housing units will require in next 4
years.
Office space for IT/ITeS: Five-fold increase in office space
requirement over the next 3 years
Commercial space for organized retailing: 200 million sq.
ft. by 2010.
Hotels & Hospitality: Over 40,000 new rooms in the next 5
years
Investment opportunity of over US$75 billion in will require
in the next four years.
Working Group on Urban Housing pertaining to the 11th Plan
made assumptions on unit cost of construction of houses in
million plus cities and other urban areas for estimating the
investment required for overcoming the housing shortage. The
total estimated investment for meeting the housing
requirement upto 2012 was estimated to be of the order of
Rs.3,61,318.10 crores consisting of Rs.1,47,195 crores for
mitigating housing shortage at the beginning of 11th Plan
and Rs.2,14,123.10 crores for new additions to be made
during the 11th Plan period (this includes construction of
pucca houses & upgradation of semi-pucca and kutcha housing
units.
Apart, India in the next two years period is estimated to
require investments worth US$60 billion by 2010. This again
has opened up opportunities for foreign investments in the
realty sector. FDI liberalization in year 2005 has thrown
open the lucrative parts of the Indian realty market to
global investors.
Foreign Direct Investments in the real estate sector in
India would also contribute towards making the sector more
organized. Besides increasing professionalism in the sector,
it would bring in advanced technology and help in the
creation of healthy and competitive market environment for
both domestic and foreign investors.
Real Estate companies have been successfully tapping the
countrys booming capital markets for funds.
Commercial office space requirement is led by the burgeoning
outsourcing and Information Technology Industry. The leaders
of the IT/ITES world have set up or are setting up their
centers in India. Estimated demand from IT/ITES sector alone
is expected to be 150mn sq.ft. of space across the major
cities by 2010.
In residential sector there is housing shortage of 19.4
million units out of which 6.7 million are in urban India.
High demand growth has led to prices doubling over 3 years
in many cities.
The increase in purchasing power and exposure to organized
retail formats has redefined the consumption pattern. As a
result the country has experienced mushrooming of retail
projects across the cities.
Growth is expected in the all following sectors and Foreign
Direct Investment is encouraged and permitted these sectors
subjected to certain conditions.
Hotel Development
Tourism
If you want to read article go to second part of this -
Indian real estate investment policy India Part II.
India Law offices wrote this article on behalf of real
estate investment policy in India Law. For more information
on Indian real estate government policy for visiting India
law firms lawyer online directory and online legal services
by helplinelaw.com.
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