New Delhi, Aug 10 (UNI) Emerging from a slowdown, an ASSOCHAM study says growth rate of the real estate retail market will jumpstart from the present 20 per cent to 35 per cent in the 12th five-year Plan (2012-17), creating huge opportunities for developers in the country.
The study gives reasons as to why the retail real estate market is poised for a leap. The Information Technology sector alone is expected to require about 200 million sq ft space across major cities and in large townships. Similarly, large space is required by other sunrise industries.
The study estimates that in the residential sector, the housing shortage is around 20 million units of which nearly seven million units would be in urban India.
It says the increase in purchasing power of the people and exposure to organised retail formats have re-defined the consumption patterns for dwelling units. As a result, retail projects have been mushrooming in smaller towns and cities.
As per estimates arrived at by ASSOCHAM, nearly 30 million sq ft of organised retail space is currently available. Another 100 million sq ft is likely to be added by the end of 2008 from over 300 mall projects.
Out of this, 20 million sq ft is slated to come up in Delhi and Mumbai alone and around 10 million sq ft in Ludhiana, 5.8 million sq ft in Chandigarh and 3.5 million sq ft in Ahmedabad.
The country is witnessing a spurt in extremely large retail spaces. Shopping malls with over one million sq ft of space have become the order of the day. About 20 of these are now at various stages of construction in various parts of the country.
Majority of retailers are now planning to expand their operations within the city they have projects and an equally large number are willing to start new establishments in other cities.
The study says with possible further liberalisation of foreign investment norms in the real estate sector, the impending boom in the sector and the growing interest of global investors in India, Foreign Direct Investment (FDI) is likely to leapfrog to 25 billion dollars in the next 10 years from the current level of four billion dollars.
The study says foreign investors are keenly looking at India for parking their surpluses as real estate is a hot market and returns on such investments are expected to be higher in the near future.
ASSOCHAM is of the view that the high interest rate regime would be subdued in the future. The low interest rate environment will spur growth of the housing sector and commercial properties.
The country, growing at 10 per cent per annum for at least a decade, would create huge space for overseas investors in the sector.
The domestic real estate market at present is estimated at 15 billion dollars, in which the FDI component is to the tune of four billion dollars.
The study estimates that the bank credit to the sector would be of the order of Rs 3,50,000 crore, which will multiply substantially in the coming years.
All in all, the study is of the view that the real estate market is poised for a much higher growth than hitherto, requiring enormous funds for its expansion. With the relaxation of FDI norms, foreign players will become an important component of the sector.
UNI SG/GS MP ht1148