Quick Overview – What are the Fundamentals of Real Estate Market?

For years, the real estate market has been the backbone of Indian economy. It has been one of the key backers contributing nearly 6% to the country’s GDP. While the fundamentals of the industry continue to remain strong, its complete potential remains unexplored.

Continues to drive the growth

The property market continues to drive growth and has a positive impact on commerce. It supports more than 260 auxiliary industries including steel, cement, construction material, brick, etc. It is also the major employment generator in India, second only to agriculture. However, come 2030 it will be the largest single job generator, replacing agriculture from the top. It supports the bread and butter of nearly 100 thousand people and the number continues to swell each year.

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Strong fundamentals

The realty industry has strong basics. In fact, its trending Indian real estate globally! The number of foreign institutional investors eyeing aggressive investments here has increased fourfold in the last 2 decades. The realty sector in India has seen a robust growth since the year 2000 and has gone to make new highs and new lows in the subsequent years. Though, it did see some challenging phases in the year 2009 and then again in 2011 and 2013, it has made smart recoveries and has gone to give decent profits to both investors as well as end users. Having said this, the long term fundamentals remain intact, and the analysts world over have estimated an annual return of 12% to 14% from Indian realty industry in the medium to long term.

Stout points

The sector has evolved big time with several mega projects launched and executed successfully over the last decade. Several new initiatives taken by the central government and the reduction of repo rate by the Reserve Bank of India (RBI) have also helped this cause. Additionally, the evolution of online real estate portals like Housing.com has led to increased retail participation and brought in the much needed transparency,which the sector was long struggling for. This site features lakhs of verified and genuine properties including resale, under construction and ready to move flats in Gurgaon and other cities of the country, thus giving the prospective home buyers several options to choose from. With the government itself leading the digitalization process, the realty e-commerce is all set to be the next big thing in Indian economy.

Grey area

It’s not all hunky dory in property market and there are some glaring challenges that need to be addressed immediately if the sector really has to make some progress in offline sales and revenues. There have been numerous instances, wherein the innocent home buyers have to run from pillar to post to get possession of their apartments even after making the full payment. This is driving the people away from offline sales and at some point may become a major issue for the industry. The other challenges include:

· Rising cost of material and manpower

· Shortage of skilled labour

· Delayed permissions from authorities

· No proper dispute resolution mechanism, etc.

In fact, as per the recent news, one of the major grey areas in Indian realty sector is corruption. Nevertheless, corruption is not something that cannot be tackled. The reform measures of government and the transparent online deals can go a long way in cutting this menace.

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