Realty sector to touch $50 billion, says study

The domestic real estate sector may emerge a $50 billion industry by 2010 and prove one of the most attractive sectors for foreign investments.

An industry research by financial services firm India Infoline (IIL) said the real estate sector, which was growing at 33 per cent CAGR (compound annual growth rate), could be a $50 billion industry in the next four years, if the institutional participation supported its growth.

The research saw strong economic growth, favourable demographic changes, fiscal benefits, lower interest rates and improvements in institutional framework helping the industry's growth in the last two-three years.

"The evaluation reflects that since 2004 most companies have reported astronomical growth in profitability on the back of rising property prices. In 2005, the industry grew at around 30 per cent. Now, companies have lined up projects, which are more than two-three times the size they have completed in the past five years," the report said.

Sachin Neema, research head, IIL, said, "We estimate India to experience a demand-supply gap of 17.9 million housing units by 2010. This apart, commercial real estate demand is expected to be around 350 million sq ft, of which IT/ITeS and organised retailing sectors should contribute around 300 million sq ft. Sensing this huge opportunity, the market has seen increased interest following the FDI relaxation and government's SEZ policy. Cities are expected to form hubs of development, around which economic activity will prosper."

The research report also said tier-I and tier-II cities were best placed to take advantage of the growth in the real estate market.