Role of Real Estate in the growth of Indian economy

Real estate being an ever-evolving sector of India plays a very important role in the economic development of the country. Contributing to other sectors such as cement, brick, paint, steel and other building materials, real estate has a lot to offer. In terms of Foreign Direct Investment (FDI) inflows, real estate is the fourth largest sector in the country accounting to this growth.

Talking about the government support for such initiatives in the country, the Union Cabinet has approved close to 100 Smart City Projects. Moreover, the FDI limit for townships and projects in Special Economic Zone (SEZ) has been permitted to 100 percent. These proposals have improved the overall scenario of how real estate is perceived in India and its future possibilities. Keeping in consideration the fluctuating real estate market in India, it is rather vital to have government support for better outcomes.

Starting from the year 2008, the Indian real estate properties suffered a huge loss. However, from the year 2010, it recovered from the aftermath of a heavily disorganized real estate market. A different approach was used the time people started developing new properties and it was the concept of ‘affordable housing’. Through this approach Indian real estate saw light of the day and went on to become one of the most sought after countries for realty deals.

An independent growth of housing real estate sector has come into the limelight since past few years. It is because of the fact that this segment holds the market share of 70-80% among the entire chain of real estate. One of the other factors impacting the market value is interest of developers in Tier 2 and Tier 3 cities due to availability of land and a marginal drop in prices. After most of the Tier 1 cities filled out and fell short of land spaces, this option made developers re-think their planning structure.

The whole cycle of economy can be easily linked to the real estate growth. This could be explained with a theory that whenever a country’s GDP changes its direction, real estate sector gets affected by it. In simpler words, if the economy is sluggish so would be the realty sector!

One of the key drivers that have been vital in the development of Indian real estate market is foreign investment. Lucrative and easy availability of luxury and affordable housing has attracted many foreign developers as well as investors. Considering India as their next stop for the purchase, buyers are betting high on the growing economy that the real estate market has.

Besides the aforementioned factors and possibilities, demographic factors and economic fundamentals have also become vital to define a country’s situation of real estate investment. The industry needs some more time to mature and till then India needs more global investments. Policies such as Real Estate Exchange Traded Funds (ETFs) and Real Estate Investment Trusts (REITs) are charged up for the big storm coming in. To conclude it in simpler term, it would not be wrong to say that the real estate market of India could be the next stop for investors from whole world.