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Cheap is not always best!


Cheap is not always best!

Last updated: June 5 2007
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  • Cheap is not always best!

    Indian services sector like retail, telecom, IT, and healthcare account for 50% of the national GDP, of which retail alone accounts for 35%.

    The retail sector is pegged at an annual growth rate of 35%, taking the retail realty from the current estimated $288 billion to $600 billion by 2015. The organized retail sector should cross $37 billion before 2010.

    The expected growth is propelled by the availability of quality retail real estate space at an affordable price. This is evident in the bludgeoning outlet with higher densities of people. With over 12 million retail outlets in India, each person gets just 2 sq. ft. to himself which is much lower than a person in US who gets 16 sq. ft.

    Affordable real estate is therefore a cause of concern for international and big Indian businesses as the lower prices are not converting into as much profit. Spiraling prices of ancillary products of real estate like construction material and increased tax burden is making it a no-show, squeezing the profit margin.

    There is a danger of the increased rental accompanied by realty prices affecting the whole investment scenario as investors would now think twice before their launch plans.

    So the cheap realty prices might not ring as good as thought to be!
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