Track2Realty: Cumulative commercial real estate loans have tripled to reach INR 1.428 billion in the last six years up to November 2013, whereas individual housing loans doubled to reach INR 5.185 billion during the same period.
More jobs are created with every new firm getting registered, thereby putting more income in the hands of Indian households. This also has had a benign effect on residential real estate. Loans to individuals for house purchase have nearly doubled during the same six-year period. Developers operating in the residential market in India have also benefitted from the mismatch in demand and supply, as housing shortage has been a perennial problem in India.
In spite of the effects of the GFC and a general slowdown in the Indian economy, physical real estate has been performing well. Apart from the underlying demand-supply mismatch, the advantages of investing in physical real estate over equities were significant.
The BSE Realty index witnessed a significant decline of 89% in absolute terms from 2007 to end-2013. In comparison, commercial property prices declined only by 14% during the same period.
With the revival of the world economy in the near to medium term, investors will become more confident in investing in physical real estate in India as opposed to investing in equities, given the healthy returns expectation as well as downside protection the former offers.
Other repot highlights:
· IT-ITES sector-the largest occupier of real estate space in India continues to strengthen
· Slowing down of FDI evokes some support from policymakers
· Real estate investments in India: FDI conditions in the Press Note 3 guidelines
· Indian REITS – A keenly awaited source of funding for cash-strapped developers
· Value of ‘under-construction’ real estate in India: Analysing office sector value dynamics
· Taking stock of ‘completed’ office assets in India
· Growth of Real Estate Office Stock in Different Cities over 2009 Stock
