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Real Estate OpportunitiesViews: 433
Nov 25, 2008 5:39 pm Indian Real Estate: Should you be investing now?

Ravi Padmanabhan (padmania@gmail.com)
The real estate industry in India has been on an upswing for the last few years growing at an average of 30% year-on-year. Major reasons for this boom being the growth of the industrial sector and the liberalisation on FDI policies by the government. But with the recent slowdown one wonders if this is the best time to make any investments in real estate.

Ideally, the right time to invest is when the market has bottomed out, but the irony is nobody knows when a market is in its low and if it is the end of the recession. Therefore the best thing to do is to buy when it is low with a right long term investment strategy.

Fact is that the real estate market in India does not offer a good short term outlook due to the credit crisis. However, the long term growth is intact fuelled by strong fundamentals like the rising income, growing population and a growing economy Add to that the fact that property prices have become quite attractive with developers offering various buyback plans and discounts.

Financial Aspect: Opportunity to grab
A correction of 20% is witnessed in property prices across all Indian cities, especially in Tier 1 cities.
Interest rates are as low as 10.25% -11% and are expected to fall further with inflation numbers in single digit now.
Developers are now offering indirect discounts like buy-back offers and are also funding incentives on projects
All-in-all the customer today is very well placed to bargain for the best deals

Capital Appreciation – High in long term
There is a genuine demand driving the Real Estate Industry. According to the ministry of housing and urban poverty alleviation, there is a shortage of 24.7 million houses in the country!
According to Cushman & Wakefield, the pan-India demand projection across office, residential, retail and hospitality segments is expected to be approximately 1,098 million sq. ft. in the coming 5 years.
Government is liberalizing the norms for FDI facilitating increased investment in Real Estate sector by Overseas Investors
The rupee is at a 10 year low against most foreign currencies, making Indian property that much cheaper in dollar terms and therefore a great avenue of investment.

India story still Intact
The BRIC report citing the Indian economy's potential with the view of surpassing the richest countries by 2050 is indicative of it being among the fastest growing markets
Top 50 Indian cities will have a gross income greater than US$20 billion by 2015
In 10 years there are forecast to be over 400,000 HNWIs, four times the number today.
The Indian economics continues to be resilient. GDP growth is projected at 7% for the year 2009. During April-Aug 2008, exports rose 35%, while imports rose 37.7%, indicating sustained demand.
FDI during April-August 2008 was a record US$14.8bn (a 114% rise Y-o-Y)

Real Estate Growth: Large & Real
India’s population is set to rise by around 320 million from 1.13 billion in 2007 to 1.45 billion by 2025
It is estimated that more than 70% of households are currently nuclear families, a figure that is expected to rise further and create additional demand for housing in the medium term
Total personal disposable income has risen from US$ 492 billion in 2003 to US$ 876 billion in 2007 and is expected to rise to approximately US$ 1,800 billion by 2012.
India’s urban areas are set for strong growth in the medium term. It is forecast that 41% of the population will be living in urban areas by 2011, an increase from 28% in 2001

Happy Investing

Private Reply to Ravi Padmanabhan (padmania@gmail.com) (new win)

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