In the light of the economic growth and development, India is projecting that the real estate market is bound to grow. The realty market is expected to grow at a CAGR of 11.2% and reach $180 billion by 2020. The real estate industry contributes around 5 percent to the country’s GDP ( Gross Domestic Product) and is estimated to reach 13 percent by 2028. The real estate market is categorized in two-
- Commercial real estate
- Residential real estate
- Industrial real estate
Investment in real estate has been the most popular investment for the Indian population. The boost in the Indian economy is attracting a lot of investment even from outside India. According to the World Investment Report 2016 by United Nations Conference on Trade and Development, India is in the fourth position in Asia for FDI (Foreign Direct Investment) inflows. The change in the government’s policies is the reason for attracting foreign investors.
The rapid growth in the service sector and the industrialization are the driving factors for Commercial and Industrial real estate industry growth.
The number of people living in urban areas will reach 600 million by 2031 from 434 million in 2015. Right now, India has the highest number of people in the age group of 15-35 years. This increases the demand for housing. The RERA (Real Estate Regulatory Authority) Act has brought transparency in the real estate sector and is expected to benefit both the buyers and sellers. The Act imposes liability on the builder for timely completion of the project and on the other hand, imposes a penalty on the buyer if the dues are not paid on time.
Impact of Demonetisation
Demonetisation affected all the sectors, real estate is no exception. There was a lot of uncertainty and stagnancy in the market. It was a temporary phase. One of the effects of demonetization is a decrease in the home loan rates and 2017 is expected to be a good time for the buyers.
Effect of GST on Real Estate Market
The Goods and Services Tax imposes a tax of 12 percent on under-construction properties. The GST is going to benefit both the buyer and the seller. Previously the developer and the buyer were imposed various taxes which ultimately increased the cost and were difficult to understand. GST makes it easy and straightforward.
According to a survey, the top five cities for residential investment in 2017 are-