REAL ESTATE - A LUCRATIVE INVESTMENT OPPORTUNITY IN INDIA

REAL ESTATE - A LUCRATIVE INVESTMENT OPPORTUNITY IN INDIA

By Sanjoy Gupta
Pravasi Indians Group
http://www.pravasi-indians.com/


The Indian economy and the real estate sector in particular scaling new heights day by day. And in the recent past the Real Estate India has emerged as one of the most appealing investment areas for domestic as well as foreign investors.

Indian real estate has huge potential demand in almost every sector, but especially commercial, residential, retail, industrial, hospitality, health-care etc. But maximum growth is attributed to its growth from the booming IT sector, since an estimated 70 per cent of the new construction is for the IT sector.
The investment attitude has undergone a radical change in India. Earlier the investors used to invests mainly in equity bonds, share certificates etc, now with the advent of all round developments in the field of real estate, people are more inclined in parking their money as real estate investments.
The scenario is lucrative for the foreign investors as well. And the recent easing out of the policies for the Foreign Direct Investment (FDI), investment figures are increasing in leaps and bounds.
Significantly, as per the latest FDI estimates released by Department of Industrial Policy and Promotion (DIPP), the government nodal agency, the non-resident Indians (NRIs) have contributed FDI inflows worth about US$ 41.78 million in December 2009 through the automatic route, almost 2.71 per cent of the total FDI inflows in the same month. Total NRI FDI inflows through the period April-December 2009-10 stood at US$ 320.05 million.

Salient Features
1. Selling and buying Indian property is now considered as the most profitable and attractive business opportunity in the present real estate scenario in India. New demands have added to strength of real estate markets across the commercial, residential and retail sectors in India. Not surprisingly, demand for Indian property has been increasing steadily for the past few years and it has exceeded supply.

There has also been an upward swing on the real estate price values in the recent years. Due to the huge demand and rising prices, investment and speculative interest in real estate is growing while excess money supply, stock market gains and policy changes are adding to the trend in favor of the real estate sector.
2. In the last one year, the capital values of the commercial office spaces has increased by up to 40% owing to the increase in the demand from IT / ITES and BPO sector across major metros in India.
3. India has a distinct regulatory and financing management in place.
4. Real estate boom in India is supported by its own flourishing economy on a sustainable basis. Here, growth of the property market is not a result of renovation and overhauling; but rapid development that witness for India riding the high growth wave.

Factors Favoring Investments

Tremendous growth has been taking place in both residential as well as commercial segments that is attracting huge investments phenomenal price escalation (more than 100% in several places) in last couple of years.
Lower interest rates, easy availability of housing finance, burgeoning income and better job prospects, increase of nuclear families have given a boost to the demand for residential properties in India. The net yields (after accounting for all outgoings) on residential property are currently at 4-6% p.a. However, these investments have benefited from the improving residential capital values. As such, investors can count on potential capital gains to improve their overall returns. Capital values in the residential sector have risen by about 25-40% p.a in the last 2 years.
The retail market in India has been growing due to increasing demand from retailers, higher disposable incomes and opening up of FDI in Retail. The capital appreciation in this sector is close to 20-35% p.a. However, the risks associated with this sector are higher as retailers are prone to cyclical changes typical of a business cycle. Changing consumer behavior combined with increasing disposable incomes will ensure further growth of the retail sector in India.
In the present day scenario, if there is any powerful investment tool that brings burgeoning financial returns, it is INDIAN REAL ESTATE!!! Investors should consider the parameters minutely and meticulously to find out why investing in Indian real estate now is the best viable option.

Sanjoy Gupta
Pravasi Indians Group
http://www.pravasi-indians.com/