Commercial Space Demand Fuels Real Estate Growth in India

By: Propertiesmls

The three primary segments of real estate development in India, with a focus on demand for residential, commercial and retail use is reported to be sustaining a strong growth in the realty sector, till at least the year 2010.

Reports released by Knight Frank, a global real estate consulting group say, the real estate segment in India is growing overall at an annual rate of 30%. Ranking India fifth in the retail sector from amongst 30-emerging global retail markets, Knight Frank predicts a 20% growth rate for the organised retail segment by financial year 2012, indicating the retail industry will witness over a Rs. 100-billion investment up to FY-10.

Presently, 30-million sq. ft. of available mall space in India is expected to increase to 100-million sq. ft. by FY-10. Of the total mall space to be developed, around 75% is in cities like Mumbai, Pune, Bangalore, Hyderabad and NCR. The rest will be in Tier-II and Tier-III cities of Nagpur, Ahmedabad, Chandigarh and Ludhiana.

And, over the next three years, 300-malls are to be developed in the country, with the Merrill Lynch report on real estate trends predicting malls in the five cities of Mumbai, Bangalore, New Delhi, Hyderabad and Pune to reach up to 250 in number by FY-10. Then too, recently, Reliance Industries announced its retail venture with pan-India footprint covering 1500-cities and towns that will involve an investment outlay of Rs. 25,000-crore.

In the commercial space segment, business opportunity is led by the unprecedented outsourcing activity in the country that in turn is driven by Information Technology (IT) or IT-enabled services. Many global firms are setting up back offices and outsourcing their work to India. According to research carried out by Knight Frank, as the trend gathers pace, commercial space requirement will expand to 100-million sq. ft. by FY-08. Of this, almost 75% to 80% will be contributed by the IT / ITES industry.

Industry feedback and business associations indicate that a large number of firms have evinced interest in setting up special economic zones (SEZs). Growth in this sector is being fuelled by incentives given by the Government of India, which has attracted huge foreign direct investment. For example, the Dubai-based real estate major Emmar group is busy setting up SEZs in Haryana at an estimated investment outlay of $1.5-billion.

While, investment in the residential segment is estimated to cross the Rs. 9,000-billion mark in the next five years, the number of households that are estimated to be built in the next five years stand at over 5-million. And, all this real estate construction is expected to create a surge in the growth for demand of raw materials, such as cement. The cement consumption projections by National Council of Applied Economic Research (NCAER), on a conservative basis have placed cement demand at 225-million tonnes by FY-11. Moreover, if the government goes ahead with infrastructure projects in as big a way as planned, cement consumption is pegged to be at a much higher level than 291-million tonne.

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Source:

India Properties
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