2.7 The Real Estate Sector in India The Indian real estate industry is on a high growth path with a current market size of $15 bn approximately. Moving on, it is expected to be over $50 bn by 2010, growing at a CAGR of 35-40%.The growth is being propelled by a variety of factors including the political reforms, favourable interest rate regime leading to easy finance availability, rising income levels and the market getting more organised. But it has not been like that since long. The Real estate demand comprises of mainly three aspects:
•
Consumption demand: It comes from the strong growth in urban areas, higher disposable income, higher retail lending, lower interest rates and higher demand for real estate.
•
Demand from outsourcing: It comes from business process outsourcing in IT & ITES and Pharma. Further, with the growth in Knowledge Process Outsourcing of skilled and high-end functions in finance and biotechnology.
•
Investment demand: It comes from high Capex plans and infrastructure investments by government and public-private initiatives.
2007, SEBI has proposed setting up of Real Estate investment trusts (REITs), paving the way for wider participation by retail investors in the country's booming Real Estate sector. Under the draft guidelines issued by Securities and Exchange Board of India (SEBI) scheduled banks, public financial institutions, insurance companies and corporate will be eligible to set up a REIT, with initial networth of 50 million rupees. India is currently in the process of formulating definitive legislation for the introduction and smooth functioning of REITs in the Indian Real Estate market. 1. Indian REITs will help individual investors enjoy the benefits of owning an interest in the securitized Real Estate market.
2.
The best benefit being that of fast and easy liquidation of investments in the Real Estate market unlike the traditional way of disposing Real Estate.
3.
The government and Securities and Exchange Board of India SEBI through various notifications is in the process of easing the norms of investing in Real Estate in India directly and indirectly through foreign direct investment, through listed Real Estate companies, mutual funds etc.