Real estate is a growing industry, especially as the Indian real estate market is experiencing a true explosion. The investors, both Indian and foreigners, are eyeing the metropolitan cities so that they can reap more and more benefits in the near future.
India has emerged as one of the most attractive real estate markets in the world. With a population of more than 1.1 billion, including a diverse range of middle class section that is growing rapidly, the country’s GDP grew by 9% annually. Real estate investment in India is being promoted through the buying process of real property (land, house), which is quite simplified. The government has eased foreign direct investments (FDI) and thus various provisions are being offered to the foreign investors that would aid in buying properties in India. To own a property in India, the foreign investor would require residing at least 6 months in India and if such case is impossible on the part of the investor, an alternative would also create a limited liability company (LTD). This option makes it possible to dispense with the requirement to reside six months in India to obtain permission to buy land or a house.
The real estate industry is on all time high, in Mumbai, for example, the real estate market is booming. The price per square meter is even more expensive in Mumbai than in Paris. In the real estate business, the commercial capital of the country, Mumbai, tops the list of highest revenue earning city. Real estate in Hyderabad, Bangalore, Pune, Indore, Chennai and other big cities have experienced a positive response from the investors.
Usually the commercial real estate market of the country is driven by three important sectors in India: The BFSI (Banking, Financial Services and Insurance) sector, the Information Technology (IT) sector and the Information Technology Enabled Services (ITES). Buying a property in the metropolitan cities has been the target of most of the people who migrate from other countries to India in search of good opportunities.
The real estate valuations are higher in India than in the rest of Asia or the world, given the growth prospects. The companies in the Sensex are trading for an estimated earnings growth of 20%, reflecting a remarkable growth. Given this strong growth and high visibility of Indian companies, it is likely that the investment is profitable in the next 12 months, even if investing today is probably not the most opportune time. However, in a market moving so quickly, it is an illusion to make the ‘market timing’.
Retail banks and building societies are interesting. The consumer society is growing, and housing needs are acute in India. Infrastructure such as roads, remain to be developed. To support the investments, the real estate investment trust was created in 1995, which can be used for buying properties that are listed. The investor can invest a portion of its assets in real estate without having to bear the burden of property management and can also enjoy a good financial communication while buying a property. The real estate investment trust helps the common person to invest in property which he does not have easy access, such as office buildings, supermarkets or private buildings for rental income.