The Indian Real Estate Sector is one of the sectors with the greatest potential to carve a niche for itself in the global market. It is today the second largest employer next only to agricultural and has linkages with over 250 associated industries. Even though the sector today stands much more organized than what it was a decade back, it has to face numerous challenges in the near future mostly due to the increasing urbanization.
The nature of population growth, personal and national incomes are the driving forces for all the industries. And, real estate sector is no different. The industry has evolved quite well in the past few years, while also witnessing a period of recession but there are future challenges to face - be it interest rate hike or pricing trends - so that the estate sector becomes much more stabilized and organized in the coming future.
Having attained maturity, the real estate sector is today attracting huge investments, especially FDI. The Indian real estate boom has also been partly backed by the revolution brought about by private banks in the Home Loans business as it has proved to be the most lucrative segment for the Indian banking industry. Besides these, favorable reforms ensuring easy project financing, increased fiscal incentives to developers and simplification of Government procedures are the few of the bottom factors that have catapulted the growth in this sector. In pursuance of the expected growth that this sector will take, the future is full of challenges.
In the commercial office segment, in spite of the huge demand, the developers may have to face heat from the ups and down of other sectors since this segment, in particular, is highly dependent on the performance of the Indian IT/ITES. While in the residential segment, there is still shortage of housing units which is bound to escalate. The most deterring challenge that would come on the way would be the product differentiation and correct understanding of the consumer needs.
With property boom spreading in all directions, real estate in India is touching new heights. However, the growth also depends on the policies adopted by the government to facilitate investments mainly in the economic and industrial sector. The real estate industry cannot sustain growth in isolation, it requires supporting infrastructure.
In the current business environment, real estate developers face many obstacles to their pursuit for growth. Yet, industry leaders are largely optimistic about their business prospects, as they strategically plan for higher revenues and profits in 2012.
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