Challenges for Real Estate: 2007 and Beyond

by : Propertiesmls

Year 2006 has been a fantastic year for the real estate sector. Most stakeholders emerged as winners. Riding on the back of exceptional economic performance and future expectations, Indian realty has had an extraordinary run.

Coming out of the shadows of stereotype family run highly regulated, average quality real estate sector, real estate in India has matured substantially. According to Jones Lang LaSalle, Indian real estate moved few notches up on transparency scale.

Real estate debate also moved past the usual discussions on ULCRA, rent control and affordable housing to innovations in investment mechanism, complex financial structures to fund real estate and expectations about the development of public market (through REITs/ REMFs) to source funds for this sector.

FDI was permitted in retail sector and retailing has taken first step to become a sophisticated activity. As a percentage of overall retailing, organised retailing is mere 3 per cent, this rather than pessimism shows the potential.

The scale of development and absorption of Grade A office space has been unprecedented. Seven major cities: Bangalore, Delhi, Mumbai, Chennai, Kolkata, Pune and Hyderabad together saw absorption of 25 million sq ft of office space.

SEZs are a development ground for new Greenfield projects that can add at least 300 million sq ft over the next 5-10 years. From few high net worth individuals investing in real estate, the market has witnessed a number of private funds actively investing in real estate.

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