Analysis of Real Estate Funding in India
Real Estate Funding
Commercial real estate sector is in boom in India. In the last fifteen years, post liberalization of the economy, Indian real estate business has taken an upturn and is expected to grow from the current USD 14 billion to a USD 102 billion in the next 10 years. This growth can be attributed to favourable demographics, increasing purchasing power, existence of customer friendly banks & housing finance companies, professionalism in real estate and favourable reforms initiated by the government to attract global investors.
Reason for growth
Growing Market Demand and their drivers
• Realization of large commercial projects
• IPOs by developers
• Gradual organization of the…show more content… Prudent pricing and timely execution key to success
The residential sector in India was the first sector to recover from recession in 2008.
After initial slow growth the sector gathered momentum and in the beginning of 2010 there were big launches and strong absorption. The residential prices inched forward creating optimism in the minds of developers. However it was the peak on Q12010 and the prices gradually came downwards with declining demands. The hike in the interest rates was considered the reason for that.
One of the lessons that real estate developers learnt from recession was the prudent pricing of the property.
Market analysis shows that after 2010 buyers have become cautious about their investment and they are on a lookout for better investment opportunity. The property with rates more than 7500 per sq foot took long to sell.
Buyers in the price range below 3000 per sq foot are classified as “Need Based Buyers” and their buying abilities were affected by hardening interest rates. Similarly buyers of plots above 7500 per sq foot were looking for alternative investment opportunities who could postpone decisions. So the Plots in the range 3000-7500 were the ones with the least unsold stocks during 2010-12.
Short Term Economic Inhibitors
Euro Zone Crisis: In fear of another euro zone crisis which can fuel subsequent