Rapid urbanisation contributing to the development of Indian realty
The realty sector of India has gained popularity and success over the last few years. The year 2011 experienced an upsurge of the real estate owning to various factors. However, this year the realty sector of India is all geared up to conserve and grow to heights whereas the global economy is trying to spring back from the economic downturn. Various seminars and summits have been organised in various cities to focus on the development of real state in India.
What is urbanisation?
It refers to the increasing population in a society present in the urban areas or cities. It simply means increased spatial scale and density of settlement as well as business and other activities in the area. As a fact, urbanisation attracts more number of businesses because of the large number of population. Apparently, this will also attract more number of people for employment and other reasons. Urbanisation can also arise due to natural expansion of the existing population or a large influx of people from outside.
The role of real estate:
As mentioned earlier, the real estate in India contributes about 5 per cent of income out of 14 per cent through the infrastructure sector and the GDP (Gross Domestic Product). Truthfully, it is still awaiting the industry recognition. Although various companies which are involved in the construction of dams, roads and others have gained the industrial status, the real estate in spite of providing employment to many people is still in the queue to get the industry standard. Apart from this, real estate also benefits more than 250 ancillary industries. The real estate sector converts raw materials into finished products in the form of buildings, and housing which is a basic human need.
Currently after the declaration of the budget 2012, there is an increased demand by the developers that the sector has to be granted with an industrial status. Most of the developers believe that the current real estate sector is highly unorganized. In fact, there is an urge that the sector should be given an industry status as it will help not only the people from the same sector but also the plus points of other people directly or indirectly allied to the sector. Apparently it is predicted that giving an industry status to the sector will result in the downfall of the value of residential properties, as the industry status will mean tax benefits and reduced stamp duty for a buyer. This will eventually affect the overall price of the property.
The impact of urbanisation on real estate:
With the increasing pace of urbanisation in the country, the realty market of India has been witnessing a drastic change in the past few months. There was a record of construction and leasing out of spaces in retail, office space and residential areas. The absorption rate of the Indian realty market was quite strong and currently is in a upward swing position. Also the economic downturn in the year 2012, it has resulted in a reality check with an increased supply. However the absorption rate has come down to an extent and there are great challenges involved in this sector.
There is a stronger need for an increase of transparency in this sector. This can improve an investor and buyer confidence. It will also result in the easing of the regulatory framework. However the skilled manpower will be developed alongside.
In order to encourage the real estate sector, the government policies should be tuned and also inspire the investment. Apparently the real estate sector is lagging behind due to a slow pace of reform from the government side that is causing investor fatigue. The government is putting very little efforts to encourage the industry. Also, apart from just the metro and the Tier I cities, the Tier II and Tier III cities have also found recognition for investment.
Since all these main areas are congested, the government of these cities is forced to concentrate on alternative smaller cities like the Tier II and Tier III cities. Few of the areas like Indore, Jaipur, Kochi, Ludhiana, Nasik, Nagpur and Chandigarh are in demand. The Indian real estate is now completely focusing in these areas and is extending new avenues for its development. The realtors are introducing an array of constructions, services and solutions for the development and the benefit of investors. Also the current situation and demand of the residential real estate market in the Tier I and the metro areas has forced the property investors to move on to the Tier II and Tier II cities. As most of these cities are on the verge of development with wider infrastructure and open space unlike other metro related areas, most of the buyers prefer these areas.
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