• Asset ClassReal estate as an asset class has shown constant growth in most markets. Given the demand- supply imbalance, the trend is likely to continue even when other assets take a beating.
  • Demand ÔÇô Supply GapBased on population growth in major Indian cities, total new housing demand is expected to be nearly 12 million units in the next five years. The gap between cumulative supply and demand (in MIG and HIG categories) is estimated to be around 45% in the top eight cities where demand is higher than supply.
  • Mumbai MarketHousing prices in Mumbai rose 19.5% from 2003 to 2008 and 11.6% from 2008 to 2013 against salary growth of 18.4% and 10.4% during the same period. Mumbai real estate market has offered above average growth rate in the past two decades, with the performance likely to continue.
  • Ever Rising EconomyIndia is a vibrant and diverse country with its economy integrating increasingly with the global economy. One of the worldÔÇÖs fastest growing economies, India apart from sustaining the global economic downturn of 2008-09, is also slated to grow at consistently higher rates during the next few decades.
  • Population and
    Scarce Housing
    IndiaÔÇÖs population is around 1.3 bn, out of which about 78 mn do not have homes, with more than 100 mn slums dwellers. GovernmentÔÇÖs new initiative to offer every Indian a home by 2022 and increased activity in slum redevelopment are expected boost the real estate sector in the next 5 to 10 years.
    India Growth Story
    India growth story is intact and just got a new lease of life with a strong government at the centre. GDP after remaining subdued for a while is expected to take off in the next 2-3 years, with faster development initiatives. This is likely to increase disposable income and ultimately boost the real estate sector.
    Market Growth
    While Demand for housing units is likely to grow proportionate to the rise in population, supply is expected to be less aggressive in the medium term. Thus, the price rise momentum would continue in the Indian real estate sector. Market size of IndiaÔÇÖs real estate sector is likely to grow by CAGR of 11.2% to $180 bn by 2020.
    The new government is likely to focus strongly on building better infrastructure. Many new projects are in progress such as national highways, airports, waterways, and metro rail network, which are likely to impact the real estate sector.

As per projections made by internationally renowned consultants and the IMF, India is likely to become one of the largest economies in the world by 2025. Here are some important aspects:

  • 1Globally, business houses have realized the growth potential that India markets provide and they increasingly want to be a part of this growth story.
  • 4The Indian economy is a ÔÇÿhigh growth, low inflation economyÔÇÖ and one in which there has been an increase in foreign investments.
  • 2Some of them are already stepping up their portfolio and the rest are eyeing India for profitable opportunities in the coming years.
  • 5Last decade saw broadening and deepening of Indian financial markets. The country’s macroeconomic fundamentals have improved while the external vulnerability has reduced sharply.
  • 3India is a country with a wider choice of investment opportunities.

Investing in Real Estate

Real estate has always been a preferred investment option to beat inflation handsomely. Here are some vital points:

ROIWith the economy on a growth track, prime properties can fetch excellent returns in real terms.

AssetReal estate is as an asset class whose prices have been rising in most markets. Given the demand-supply imbalance, the trend is likely to continue in good stead even when other assets take a beating.

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