India's Real Estate Highlights

Executive summary

• Notwithstanding the global uncertainties arising out of the subprime meltdown, potential slowdown in US and weakening of the dollar, the real estate demand in India across sectors remains strong on the back of phenomenal economic performance.
• Office sector, owing to increasing employment and business generation, is driving the demand for retail, residential and hospitality segments. It emerged as the most dynamic sector of 2007, with increase in demand resulting in consistent rise in rental values.
• With a number of infrastructure initiatives underway, i.e. the metro rail and airport upgrades, real estate activities in major cities are expected to strengthen further. City boundaries will continue to expand to accommodate growing demand and new real estate centers will emerge.
• Consistent demand, rising capital, increasing rental values and easy availability of capital have led to widespread real estate development activity. Going forward, the year 2008 is expected to see an infusion of approximately 87 mn.sq.ft. in the office sector,182 mn.sq.ft. in the residential sector and 36 mn.sq.ft. in the retail sector in the seven major locations of the country.
• Economic growth indicators along with demand-supply analysis point towards a decrease in marginal rates of growth of real estate values over the medium term and a possibily reaching a plateau by the end of 2008 - barring a few exceptions. This will be due to a supply build-up over the next 12-15 months rather than a lack of demand.

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