No announcement yet.

Scarcity of houses despite of real estate boom in India


Scarcity of houses despite of real estate boom in India

Last updated: July 17 2007
0 | Posts
1549 | Views
  • Time
  • Show
Clear All
new posts

  • Scarcity of houses despite of real estate boom in India

    Even though the real estate sector is at its all-time-high in the country and is apparently showing no signs of slowing down, total returns or operating profit from the sector is likely to moderate in future in comparison with those of the past three years.

    Moreover, despite the boom, the sector is unlikely to be able to fulfill the growing housing demands of the country, especially of the middle and lower income groups.

    According to the ICICI Bank Global Investment Outlook for July, brought out by the bank’s Private Banking Research Division, operational income of the sector grew at a rate of 179 per cent over the past 5 quarters, with operating profits up by a massive 469 per cent. Average margins of constructors are now as high as 29 per cent with some real estate companies in the national capital region and the Mumbai-Pune belt earning an astronomical 200-170 per cent.

    The report also points out that despite the boom, the sector will not be able to fulfil the demand for low and medium income group (LIG and MIG ) housing and there will be a shortage of about 27 million houses by 2012.

    A prosperous middle class, higher incomes and fast urbanization has presented numerous opportunities to develop the retail sector especially in India and China. The report foresees a huge growth in MIG and LIG housing. “Property prices have stabilized over 6 months as developers cannot afford to hoard flats. But there is maximum demand in the LIG and MIG sector which will result in a shortage of 27 million houses by 2012 estimated.”

    However, North and West India is likely to see 15-20 per cent correction in realty prices and 50 per cent fall in real estate offtake may also be witnessed. “We expect global real estate securities to benefit from continued GDP growth and strong property fundamentals,” the researchers observed. The sector will continue to have the potential to deliver attractive returns, albeit at lower levels than seen in the past three years. Citing reasons for the growth in the real estate market in India the report observes: “The retail market in India has been growing due to increasing demand from retailers, growing number of employed women, higher disposable incomes, media proliferation and growing consumerism.”

    Source: The Statesman
Have any questions or thoughts about this?