Real Estate in India is already a huge sector which is not only growing in terms of profitability but also the variations and the number of people it employs. As 2014 nears an end, we take a look at factors that will determine the future growth prospects of the real estate sector of the country.
Affordable housing is going to be the biggest sunshine segment in the coming years as the government has already made it a priority sector. Not only is the government offering relaxation in FDI norms for international companies and investors seeking to invest more than 30% of their funds in the affordable housing sector, the vast majority of Indian population seeking a affordable house gives the sector sustenance and growth. Real estate companies can finish projects with a lower budget while low selling price would mean people of all financial classes would be able to invest in the project.
With the Central government announcing its plans to build over 100 smart cities, smart city development is the next big opportunity for real estate manufacturers and investors. Some of the existing smart city projects have been witnessing a growth prospect of 10-15% annual increase with experts suggesting a much better long term prospective. Kochi Smart City, Gujarat International Finance Tec-City (GIFT) in Ahmedabad, Naya Raipur in Chhattishgarh and Wave Infratech’s 4,500-acre smart city near New Delhi are some of the popular smart city projects that have already taken a lead with active investments from end users, investors and real estate manufacturing companies.
Smaller Tier 2 and Tier 3 Cities with Growth Potentials
Tier 2 and tier 3 cities have been offering far more real estate projects leading to a pan India growth. Some of the biggest real estate companies are focusing on smaller centers offering investment opportunities galore. With real estate prices in the metropolitan cities getting stagnant to an extent, expect for projects located the new industrial corridors the smaller centers are offering a great opportunity for both investors and real estate manufacturing companies.
Real Estate Investment Trusts (REITs)
The introduction of real estate investment trusts (REITs) as announced by the finance minister Mr. Arun Jaitley in his annual budget speech is one of the positive factors likely to lead a positive impetus in the real estate sector. Real estate investment trusts (REITs) would not only increase liquidity in the cash strapped sector, it would allow end users to invest in the real estate sector from as low as Rs. 2 Lakhs and be a part of the real estate growth story. With SEBI finalizing the guidelines for REITs earmarking a minimum investment at Rs 2 Lakhs, people who were earlier willing to invest in the realty sector can now get involved in the real estate sector.