Monday, October 2, 2006

About Real Estate

Is the Real estate story real? The size of the real estate industry in India is estimated by FICCI to be around $12 billion. It is growing at a pace of 30 per cent.

Everyone is taking a look at Real estate these days. Specially after the stock market volatility, there are questions on whether Real estate is also a bubble built up on bull behaviour or is it really a goldmine.

We must understand the background of the growth story and various market cycles involved before reaching any conclusions.

The background of the growth story will be
1. Demand supply gap
2. Growing purchasing power
3. Fiscal benefits provided by the govt.
4. Growing economy
5. Off-shoring business, including high-end technology consulting, call centres and software programming houses.
6. Huge potential for growth ( India's mortgage to GDP ratio is only 6% compared to more than 50% in US)

Real estate cycles are generally classified into 4 stages. 1. Recovery 2. Growth 3. Post growth 4. Contraction. These stages are based on property rent and vacancy rates. Presently it appears that India is in the growth phase.

Another development in this field is the number of web portals dedicated to making the real estate market more transparent. They provide internet and technology services to the real estate industry and listing of allied services to the target audience with interest in Indian Real Estate sector. Developed with a motto to reach the millions of users across the globe and reach the potential buyers and tenants, the sites is a definite improvement for the real estate scene in India. Prominent among them are www.99acres.com , www.magicbricks.com , www.realestateonline.in , www.indiaproperties.com , www.abodesindia.com, www.indiahousing.com .


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