September 28, 2007

Real estate market to grow at 33 percent

The real estate market in India is expected to grow at 33 percent between 2005-2010, and increase its worth from $12 billion to $50 billion.

Total housing spend is expected to grow at a CAGR of 18.60 percent from Rs 171,800 crore in 2005 to Rs 403,400 crore in 2010.

A seminar on "South India - the changing impact of the real estate boom," organised by the Indo-American Chamber of Commerce on Thursday portrayed a tremendous increase in real estate prices in southern cities like Bangalore, Hyderabad and Chennai.

This IT golden triangle makes them the most favourable location for IT/ITeS occupiers, with a capital flow into commercial real estate over the next three years estimated at more than Rs 23,200 crore. C Appaiah, senior executive at DTZ India, said that Bangalore had the highest absorption of land at 11.5 million square feet, and Hyderabad was a strong contender with Bangalore.

"Mysore is going to be a twin city to Bangalore like Mumbai and Pune and will help decongest Bangalore. Coimbatore will be similar to Mysore," he said. Southern states continue to lead in economic performance due to the IT industry.

He said that tier II cities were becoming popular for companies that were looking to expand but these places suffered from lack of infrastructure and smaller talent pool.

Mayank Saksena, assistant vice president of retail services at Jones Long Lasalle Meghraj, speaking on the changing impact of real estate boom on retail and hospitality sector, said that there was a huge opportunity for real estate retail because close to 95 percent of space was below 5,000 square feet. Delhi has 41 percent of the share in real estate retail, Mumbai 20 percent while Bangalore and other southern cities lag behind at below five percent.

Saksena said that the boom was putting pressure on retailers to reduce their store formats. “It will push budget hotels, hypermarkets and supermarkets to suburban locations and retailers will have to play a dual role of developers and retailers,'' he added. Source://