The Indian economy is steadily moving forward on its path to prosperity with economic development being the focal point of the progress. In the post liberalization era, India has attracted a huge quantum of foreign direct investment on account of its excellent economic performance. Today India is seen as a prime destination for investment by overseas investors across the board. India's favorable demographic and economic scenario makes it an attractive destination.

As per a survey conducted by Association of Foreign Investors in Real Estate (AFIRE), India is third behind China and Brazil to attract foreign investment in real estate. Last year, more than 18% foreign investors showed interest in India's real estate.

Real Estate plays a crucial role in the Indian economy. It is the second largest employer after agriculture and is slated to grow at 30% over the next decade. The Indian real estate market size is expected to touch $180 billion by 2020.

According to a study by ICRA, the construction industry ranks 3rd among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. A unit increase in construction expenditure generates five times the income, having a multiplier effect across the board. With backward and forward linkages to over 250 ancillary industries, the positive effects of real estate growth spread far and wide. Truly, real estate is a growth engine for India's economy.

Indian real estate scene has undergone a makeover in the recent years. Investment in property has increased and people are banking on real estate more than any other asset. The reason that drives such action is that real estate prices are increasing and will continue to follow the trend.

The housing sector alone contributes to 5-6% of the country's GDP. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs.

India's prime property market is being inexorably driven by demographic change. According to the National Council of Applied Economic Research, the number of households described as "rich" will have risen from 3 million in 2003 to 11 million by 2013. Meanwhile, the number of middle class "aspirers" is predicted to leap even more dramatically, from 46 million to 124 million.

Key Growth Drivers of Real Estate in India:

  • Financial growth of India's middle class creating demand for housing.

  • Strong demographic impetus: India has the second largest population in the world and the growth rate of population is still rapid.

  • Rising FDI levels has increased commercial space requirements by foreign firms.

  • Expansion of organized retail sector.

  • Easy availability of finance.

The housing demand is driven by:

  • Rapid population growth

  • Rising incomes

  • Emergence of nuclear families

  • Tax incentives

  • Availability of home loans at competitive rates