Withinflation remaining well below what the RBI had speculated and the Index of Industrial Productionregistering abrupt growth in just last couple of months, the year 2012 ended up welcoming 2013 on a quite positive note.
This, however, can’t be denied that 2012 was mostly inert and affected the real estate industry a great deal. Though quality supply was the biggest challenge in retail that affected the overall absorption, there was some improvement in the residential demand. Unsold inventories kept the developers struggling though! Well, while there’s still some time for it to close, let’s have a look at the journey of the real estate market in 2013 so far!
Growth Drivers for the Indian Economy
The focus of the RBI has been on better policies to ensure growth in 2013 despite the risk of inflation being continuously there. Alleviating interest rates were predicted to lower home loan rates and we saw it happen with an increased purchase of real estate assets. On the whole, ever-growing urbanization and increased consumption have driven the economy this year.
Retail Real Estate
Indian retailers have tried their best to capitalize on the eased FDI policies, especially in multi-brand retail. While this aggressive growth has driven the demand this year, developers have focused majorly on residential development. At the same time, retailers have not hurried to make agreements and close transactions without doing analysis.
Industrial Real Estate
BTS industrial property is now the focus of MNCs that have discovered great scope in India. Most warehousing companies seem to be shifting to bigger distribution centers from small godown level, with goods and service tax being their ultimate goal. Now more warehousing space is required for FDI is being introduced in multi-brand retail and e-retailing is becoming a trend.
Residential Real Estate
Real estate investment trusts have opened rental housing for investments and this is going to be really exciting. It will increase the demand for investment in Indian metro cities, once the REIT guidelines and framework are formulated. And if inflation takes place again, the price is going to be somewhere between INR 3,000 to 5,000/sq ft.
Office Real Estate
The demand of office space has increased by a small margin and is almost the same as in 2012. However, big businesses have already got into competition as far as office space in prime locations is concerned and this is a great chance for these spaces to earn well. Though vacant spaces are still in the filling process, more product launches can cause the rents to increase.
Health and Education
With more hospital and day-care centers coming up, health care is going to be the center of huge private equity investments in future. And the same is the case with the education sector where there has been considerable growth over the past one year. Interestingly, this expansion is more likely to be witnessed in non-metro Indian cities and they’ll relatively attract more investments.