Priya

India is one of the fastest growing economies in the world. The economy is expected to grow in the 6% to 9% range in the next five years. According to the World Bank, India is the fourth largest economy on the basis of purchasing parity. The recently released Goldman Sachs Brazil, Russia, India and China (“BRIC”) report identifies India as a major growth country where the economy has the potential to grow at over 5.5% annually to overtake that of Germany by 2027.

India is on the threshold of a real estate revolution and it presents a very lucrative investment opportunity for investors. India, after a decade of liberalization, is growing at a strong pace and its long-term global competitiveness has been acknowledged world over. With a billion people, and an early stage of urbanization, there is a lot of room for growth. This is reflected in the relatively higher real estate yields in India. Yield from Grade A office space is in excess of 10% and returns from development activity range from 20% to 40%.

A large part of this growth has been fueled by IT and business process outsourcing industry. Various estimates from firms like McKinsey, NASSCOM expect the overall industry to grow to US$65 to US$80 billion by 2010. This would imply direct employment of over 3 million people and indirect employment for over 8 million people. At an estimate of 100 sq. ft. per employee (for direct employment only) this implies over 300 million square feet of office space. This would have a cascading effect of housing, retail and recreational needs.

According to a recent Merrill Lynch report, the realty sector In India is to grow to US$90 billion by 2015. The report also estimated that the urban housing sector would require investments to the tune of US$25 billion (Rs 1.10 lakh crore) over the next five years.