Real estate in india
In India, the real estate sector is the second-highest employment generator, after the agriculture sector. Real estate sector in India is expected to reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021. By 2025, it will contribute 13% to country’s GDP.
It comprises of four sub-sectors – housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodation. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.
Factors that affect the real estate market
1. Location
Buildings, real estate and properties, located in commercial and market areas, hold higher value than their counterparts in the residential areas. It is common to find brokers quoting a higher price for buildings in well-developed and approved colonies and areas as against those in the lesser developed and upcoming areas. Similarly buildings which are constructed on freehold land tend to command a higher valuation than those on leasehold plots.
2. Amenities
The valuation of properties with better infrastructural capabilities and modern amenities are costlier than those which fail to provide proper electric connections, telephone lines, water sewerage facilities and all other infrastructure such as community centers, children parks, swimming pools, gymnasiums, parking lots or general stores. Valuation of property is clearly based on the availability of necessities and facilities connected with comfortable housing.
3. Demand and Supply
Demand for real estate in a particular area is inversely proportional to its supply. As the supply or availability of real estate decreases, the valuation of property increases. Changes in population are the key drivers for demand. Along with an increase in the number of people inhabiting a particular area, the popularity of a particular locality in terms of people wanting to be a part of the locality also increases its price.
4. Availability of land
In places where there is ample land available for residential purposes or development of real estate, the graph reflecting the valuation of property shows a slower rise than in areas where land is comparatively scarce.
5.. Infrastructure
Infrastructural development is one of the most important factors which influence real estate prices in India. The presence of roads, airports, flyovers, malls and bus terminals and other facilities in the vicinity of the property, helps in value escalation of the same.
It is a known fact that connectivity is one of the most important requirements for investors looking towards purchasing land or property. This leads to the concept which explains a rise in the valuation of property which is well connected to entertainment hubs, medical facilities, educational institutions, retail markets and business centers, along with other day to day facilities.
Will property prices fall in india ?
As there is a growing demand for corporate environments and office space as well as urban and semi-urban accommodation, there is a drastic change in growth and demand for real estate businesses. Real-Estate is considered to be the world’s most recognized sector. Investing in real estate would open a door of opportunities for investors. Real estate comprises four major sub-sectors: retail, hospitality, housing, and commercial.
On a pan-India basis, this year, property prices in India are likely to increase by 7.5%, the fastest growing in five years. According to a Reuter poll of property analysts, next year and in 2024, average house prices would forecast to rise by 6 per cent. Reuter’s polls also predict that prices in Delhi and Mumbai, along with its surrounding National Capital Region, would probably rise between 4 per cent and 5 per cent this year and in the upcoming year. In the course of the upcoming two years, the prices of Chennai and Bengaluru are also expected to rise 5.5 – 6.5 per cent.
According to experts in the field, factors such as an increase in housing demand and a rise in building material costs majorly cause housing prices to rise; also, for first-time buyers, high-interest rates could weigh on affordability. Earlier this year, the benchmark repo rate was increased by the Reserve Bank of India by 40 basis points to 4.40 per cent in its first rate hike. In efforts to tame High inflation, the central bank is expected to get more aggressive, and interest rates are expected to hike.