India has been witnessing a considerable change in the real estate sector over the past decade, owing to the opening up of this sector to Foreign Direct Investment (FDI) in 2005. This FDI commenced the entry of new vistas for funding and capital inflows, which had only a restricted scope till 2004. This move played as remarkable factor in further increasing the fundamental growth in various sectors.
The contribution of the real estate sector to India’s gross domestic product (GDP) has been estimated to be over 6% and the segment is expected to generate millions of job. The housing segment contributes roughly 5%–6% of the country’s GDP; at the same time, the retail, hospitality and commercial subsectors have also grown incessantly, meeting the escalating infrastructural requirements.
During this time period (2005-2015), the country noticed a titanic shift in the residential and commercial concepts. In the case of housing segment, we moved from independent low-rise villas and houses to high-rise apartment complexes. As a massive influx of people happened towards bigger towns and cities due to higher employment opportunities, ‘accommodating all’ became the need of the hour. In the commercial sector, traditional family-oriented business gave way to modern private and corporate sector, and thus gave rise to investment-based office space. These changes stayed as the cornerstone in the evolution of an organised real estate sector in India since 2005.
This period has also observed the rising popularity of shopping malls and a declining trend in street sales. As more people started purchasing from malls, the square feet for the office space too has increased almost five times.
Though the sales in residential property declined in 2013, the introduction of Real Estate Investment Trust (REIT) does have a positive impact on the retail market segment. Despite global concerns and economic uncertainty, Indian economy has been performing immensely well, and hence, the retail real estate market appears to be propitious. The recent easing of the norms for FDI in multi-brand retail has already attracted a lot of global retailers.