However, unprecedented growth of urbanisation, availability of work force and average age of Indians at lower level globally, India is still witnessing a stable business growth in Service Sectors both finance and non-finance including Consulting, IT & ITES, construction, infrastructure and real estate industries. Share of FDI in these sectors has been more than 30% in India. There is also a steady rise in disposal income and consumer expenditure in cities. The saving habits of Indians are pretty strong.
The global economic crisis has affected the investment in A-Grade commercial properties in India and the vacancy level is expected to marginally increase, including Mumbai. Vacancy level in Chennai and Hyderabad shall be little higher. Presently the equilibrium in demand and supply is advantageous to Bangalore. Financial constraints, locally and globally, has affected new market demand, expansion, outsourcing, domestic demand, location & relocation and Real Estate portfolio size and management.
Every real estate company in India, therefore, shall have a cautious approach in their development plan, strategy and business. Expansion and new investment plans at this stage is a crucial decision. Developers need to revisit their overall business strategy for next 3 - 5 years as short term plan and to built a blue print for a long term plan with a great degree of vision and forecast based on past, present and future.
While the overall growth shall be disappointing for next 2 years at least, the demand for residential properties shall steadily grow for first and second homes selectively. Buying a house for Indians is a huge emotional factor and considered as life essential and life stability, especially in cities and towns. Weak investors’ sentiment shall only make them wise to go for the best deals but will not hamper RE growth in residential segment. The success of any RE project in the present scenario shall depend on branded developers, proven track record, approved projects, geographical and demographic factors, property and investment size, commitment on timeline, social infrastructure, flat amenities and other facilities.
The real Real Estate bet for developers and end users/investors in present scenario is building self contained integrated township. Mixed use township under SEZ scheme has taken a beat and one of the reason is demand for commercial premises has, for both industrial and non-industrial, affected since the 2007 - 2008 global financial meltdown.
There is a good demand for satellite townships and several developers are exploring these potentially profiteering ventures. Well planned large township, with beautiful layout of buildings, elevation, greenery, school, market, hospital, bank, transport facility, club house, gymnasium & spa, proximity to nearest bus/rail terminals, airport and government blue print of the present and future development viz. ring road, metro/mono rail, commercial zone and industrial park, is the best investment option not only for dwelling but also for return on investment (ROI) in regard to value appreciation and rental income. These township development, be at upscale or downscale area, people fall for sizzle before they buy the stake. Some townships have created landmark, benchmark, redefined the definition of real estate and lifestyle for people and some new townships are discovering the new destination for people.
Let us not forget that according to World Bank report issued at May 2011, BRIC (Brazil, Russia, India, China) countries plus South Korea and Indonesia will lead the world's economy with more than a half of all global growth by 2025.
(Joseph Reddy is a resident of Thane. He has recently obtained his Master of Corporate Real Estate(MCR)/LLB, there are only a handful of professionals with this master’s degree in India. He currently serves as General Manager/Hiranandani Group based in Mumbai)
Source: www.planetpowai.com
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