Here is a Brief introduction to the growth prospects of various segments of Indian Real estate in the coming years.
Commercial Office Space
Growth Drivers
* Growth in IT/ITES sector at 30% annually (Source: NASSCOM)
* Significant growth in FDI Market Structure
* Dominated by a few large national developers with pan-India presence
* Regional players are expanding to achieve a Pan-India presence
* Shift in the type of operations from Sale Model to Lease & Maintain Model
Segmentation
* Commercial Space can be classified broadly into Grade A and B
* Business activity shifting from CBD to SBD and from Tier I to Tier II & III
Outlook
* Commercial market expected to grow at CAGR of 20-22% over the next 5 years
* IT/ITeS sector expected to require in excess of 250 million sq. ft of commercial office space by 2012-13
Residential Property
Rapid Urbanisation: Urban Population expected to touch 590 million by 2030
Growth Drivers
* Decreasing Household size: Average H/h size fell from 5.4 in 1981 to 5.1 in 2000
* Increasing working age population (Almost 64% in 16-64 age group)
* Increasing income levels: Average salary levels increased by 13.5% in 2005
* Easier access to mortgage, long tenure loans and tax incentives
Market Structure
* Highly fragmented and unorganized
* Regional players are expanding to achieve a Pan-India presence
Retail Space
Growth Drivers
* Rising consumerism with doubling of disposable income
* Growth in Organized Retailing
* Entry of international retailers
Market Structure
* Dominated by unorganised retail
* Large corporate houses entering the organized retail sector
* International retail brands are tying up with Indian partners
Segmentation
* Organized retail contribution to the retail industry grew from 2% in 2003 to 4.4% in 2006
* International retailers are present through franchisee route
Outlook
* FDI norms are likely to be relaxed in next 2-3 years
* Organised retail expected to grow at around 30%
* Share of organised retail, by sales expected to reach 10% by 2010
Hospitality
Growth Drivers
* More than 4.4 million international visitors and 430 million domestic tourist visits in 2006
* Low cost airlines
* India acquiring recognition as a medical tourism destination
* International events such as Commonwealth Games
* Emergence of India as a MICE destination Market Structure
* Entry of several corporate houses such as Reliance
* Existing hotel operators are scaling up their operations
Market Overview
* Developers are tying up with major international chains
* Developers have set up RE funds to finance their Ventures
Segmentation
* Classification on the basis of Star Rating of 1 to 5 star deluxe
* 100,000 hotel rooms in India in various categories, Five Star and Five Star Deluxe contributing close to 30,000 rooms
Outlook
* Demand to grow at 10% CAGR for the next 5 years
* Room supply to increase
* Tremendous potential for budget hotels
* Service Apartments, Hostels, Wellness space gaining popularity
Special Economic Zones (SEZs)
Opportunities Unlimited for Developers
* Under the new SEZ Policy, formal approvals have been granted to 366 SEZ proposals
* 142 have already been notified as SEZs, as on 30th August 2007
* Fiscal benefits to IT Parks expected to come to an end in 2009; SEZs likely to be preferred for
* IT/ITeS commercial office space development
* Policy allows usage of as high as 50% of area as non-processing zone, offering immense potential for residential & other support infrastructure.
