The real estate sector in India has undergone a paradigm shift with liberalization leading to rising demand for commercial and housing space. It has grown from contributing 5-6% of GDP to being the second largest employment sector after agriculture. Foreign investment is boosting the sector, which is addressing various property types across major cities as well as smaller cities. Infrastructure developments parallel real estate growth. While the sector boomed after 2005 reforms, the 2008 global slowdown impacted it. However, the long term prospects for the sector remain positive due to growing urbanization and economic development.

1. Paradigm Shift In Growth Of Real Estate In India
Ashok Sengupta
Asst Professor , Institute Of Environment & Management
J_leo8025@rediffmail.com
Abstract :
The real estate sector in India assumed greater prominence with the liberalization of the
economy, as the consequent increase in business opportunities and labour migration led to rising
demand for commercial and housing space. From 43% in the fourth quarter of 2009, supply in
this segment will come down to 8% in the same period of 2013.. This sector is the second largest
employer in India, after the agricultural sector. The recent approval of FDI in multi-brand retail
by Parliament will attract foreign investment , which will not only benefit the retail industry but
also boost the demand for commercial real estate.Having attained maturity, the real estate sector
is attracting huge investments, especially (Foreign Direct Investment) FDI. Today, real estate in
India addresses the demand for built-up space, from a variety of property segments such as
offices, residential units, shopping malls, hospitality industry, manufacturing sector and logistics
parks, to name a few. The real estate sector is also active in the establishment of SEZs and the
building of townships; it is spreading to the smaller cities and underpins their growth.
Infrastructure developments closely parallel real estate developments.
This paper presents a panoramic view of the operations of Indian real estate sector in various
property segments, the challenges faced by the sector and its prospects.
Key words : FDI, real estate, SEZs,
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2. Introduction :
More than 60 years after India became a Republic , the country has been phenomenal changes. It
has gained recognition globally as a major player in the world economy. This is also reflected in
the journey of the Indian real estate sector. The country witnessed a tremendous housing boom,
specifically in the last decade. The metropolitan cities continues to remain in demand, even Tier
II and Tier III cities are fast gaining momentum on account of their commercial and strategic
viability.
The real estate sector is a critical sector of our economy. It has a huge multiplier effect on the
economy and therefore, is a big driver of economic growth. It is the second-largest employment-
generating sector after agriculture. Growing at a rate of about 20% per annum and this sector has
been contributing about 5-6% to India’s GDP. Not only does it generate a high level of direct
employment, but it also stimulates the demand in over 250 ancillary industries such as cement,
steel, paint, brick, building materials, consumer durables and so on.
The Indian real estate industry has been on a roller coaster ride since 2005. Consequent to the
government’s policy to allow Foreign Direct Investment (FDI) in this sector, there was a boom in
investment and developmental activities. The sector not only witnessed the entry of many new
domestic realty players but also the arrival of many foreign real estate investment companies
including private equity funds, pension funds and development companies entered the sector
lured by the high returns on investments. The real estate sector has been riding through many
highs and lows since then. The industry achieved new heights during 2007 and early 2008,
characterized by a growth in demand, substantial development and increased foreign
investments. However, by mid 2008, the effects of the global economic slowdown were evident
here too, and the industry took a ‘U’ turn. FDI inflow into real estate dropped significantly and
what had emerged as one of the most promising markets for foreign investments experienced a
downturn. India’s otherwise vibrant and thriving real estate sector currently pretty much mirrors
the state of the economy. Sales have dropped, margins are under pressure and both high interest
rates and fund availability are stumbling blocks.
At the same time, the opportunity is immense and a helping hand in the upcoming budget can
give a much-needed fillip to the construction industry. When housing projects take off, it has a
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3. rub-off effect on a number of other industries like cement and steel and generates both direct and
indirect employment.
According to estimates, there is a shortage of 1.87 crore houses in urban areas. Assuming a
conservative cost of `20 lakh for each dwelling, we are looking at a gargantuan investment.
Between 2001 and 2011, the number of towns have increased from 5,161 to 7,935; districts from
593 to 640 and urban population from 1078.73 million to 1,210.20 million, he said.
The 12th Five-Year Plan seeks to step up investment in urban infrastructure; strengthen urban
governance; augment soft infrastructure (system); besides renewing and giving more prominence
to regional planning.
Objective Of Study
1. To understand real estate sector of India
2. To analysis of future prospects of this sector.
Research Methodology
The researcher has adopted analytical, descriptive and comparative methodology for this report;
reliance has been placed on books, journals, newspapers and online databases and on the views
of writers in the discipline of Competition law.
Growth In Real Estate Sector
India real estate companies have increased in number in recent times due to the boom in the real
estate sector itself which again was a function of the information technology boom in India in the
last few years, accompanied by the growth of the Indian economy at 8%.. The soaring prices of
real estate in India have led to corporate attention to this sector, with a number of India real
estate companies jumping onto the real estate bandwagon in recent years. The demand for
property is constantly getting steeper in India and as a result, the growing numbers of real estate
companies in India comes as no surprise.
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4. Infrastructure development in India has assumed mission mode as a critical prerequisite for
sustaining growth momentum. More importantly, investment in infrastructure as a percentage, of
GDP increased from 4.9% in 2002-03 to about 7.2% in 2011-12 and is expected to reach 10%
GDP by 2016-17.
Causes Of Growth
• Public Private Partnerships (PPPs) have emerged as a successful catalyst for the
implementation of various commercially viable infrastructure projects in many sectors.
Around 37% of the total infrastructure investments during the last Five years plan.
• Potential causes : In March 2005, when the current UPA government decided to
liberalize foreign direct investment norms in real estate on Feb 26, 2005, introduced the
SEZ Act in 2005, and allowed private equity funds into real estate. Other key factors that
contributed to this tremendous growth were ‘lower price’ which attracted buyers and
investors not only from India but NRIs & Foreign funds also deployed money into Indian
real estate market. These new rules ensured that Indian money stacked in Switzerland and
other tax havens can be brought back to invest in high yielding Indian property market,
away from low-yielding dollar assets. Other evidence that the Indian Property Market
may be in a bubble is the Adarsh Scam, where politicians and property developers were
in collusion to hoard property to ensure that the property would be sold to users at high
rates.
Recent development in real estate sector
AL ATE
Residential real estate industry has witnessed stupendous growth in the past few years owing to
the following reasons:
• Continuous growth in population
• Migration towards urban areas
• Ample job opportunities in service sectors
• Growing income levels
• Rise in nuclear families
• Easy availability of finance
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