The Indian real estate has always been in a state of flux guided by changing economic environment and the ever-changing real estate laws. This evolving environment has at all times demanded that both developers and buyers embrace the changes. With all-round industrial growth, the job market has expanded exponentially and created increased purchasing power.
In fact, there have been several factors driving positive change in the Indian real estate market:
- A consistent and sustaining GDP growth rate – With more money to spend, buyers can now look towards luxury living as opposed to mere living quarters.
- The expanding services sector and specifically, the growth of IT/ITeS sector has brought about a new breed of home buyers. The IT/ITeS sector has accounted for more than 80% of office space occupancy in India. With an increasing number of sector-related multinationals putting their money in India, everything is changing to accommodate IT/ITeS-specific requirements, both in terms of commercial and residential spaces.
- Positive economic growth has also led to rise in the disposable income among young executives and this subsequently, leads to growing aspirations in real estate. The rising consumerism too has proved its positive impact upon retailing and other entertainment avenues.
- Government policies today are more proactive than ever before, and they eminently support the home purchase rationale. Fiscal incentives like falling interest rates now make investment in residential properties even more attractive.
- The increasing footprint of organized retail in Tier I and Tier II cities has led to new locations emerging on the real estate landscape. New Age retailers now have an option to move/expand their business to lesser-known locations. Organized retail presence has a direct impact on residential demand in these cities.
- On the back of a growing economy, the growth of the country’s affluent class has been a strong driver for luxury housing demand.
- Another important factor positively influencing housing demand in India has been the rapid increase in double income families. Nuclear families with both spouses working has led the average age of a home buyer in India by almost 10 years. This effectively means that single-income families who would have bought self-owned homes 10 years from now can do so today with a second income stream. Likewise, families who purchased their primary homes 10 years ago are today financially capable of investing in second homes today.
- Urbanization in India has assumed a pace of 2.5% per annum – and for the next two decades, more and more people will be seeking to settle in urban locations. This also increases the demand for housing.
- Finally, increased liquidity in the real estate sector through private equity and international real estate funds will continue to open up growth opportunities. The fact that such funding seeks only reputed and well-established developers will increasingly contribute to quality levels, transparency and delivery timelines that govern the Indian real estate sector.
All these factors are radically transforming the Indian real estate market, and will continue to do so over the next few decades. In fact, the scenario today has very little in common with what we witnessed as little as 10 years ago.
Arvind Jain is Managing Director of The Pride Group, established in 1996. Pride Group has built and delivered over 10 million sq.ft. of constructed area.