Outlook for India’s real estate markets

Above-average economic growth in India. Strong population growth, a large
pool of highly-skilled workers, greater integration with the world economy and
increasing domestic and foreign investment are expected to drive India’s real GDP
by 6% p.a. over the next 10 to 15 years.

Services outsourcing revving up office demand. India is the prime
destination for IT services outsourcing. In the coming five years, at least 55 million of extra office space must be completed in the premium office segment alone.

600 new shopping centres by 2010. India’s burgeoning middle class will
drive up nominal retail sales through 2010 by 10% p.a. At the same time,
organised retail is becoming more important. At present organised retail accounts
for a mere 3% of the total; by 2010 this share will already have reached 10%.

By 2030 India will need up to 10 million new housing units per year.
Rapid population growth, rising incomes, decreasing household sizes and a
housing shortage of currently 20 million units will call for extensive residential
construction. The financing of owner-occupied housing in particular holds out
enormous market potential.

Capital market still underdeveloped. The total stock of commercial property is estimated at over USD 300 bn. So far the invested market accounts for only
USD 4 bn of this. Capital market products, such as commercial mortgage-backed
securities or listed property vehicles are still almost entirely lacking.

Heed risks. Property investments in India are not risk-free. Market transparency
is far behind European or US standards. It is therefore vital for foreign investors to have a professional local partner. The lack of liquidity and upward pressure of
pricing remain the main concern within the market.

courtesy - Deloitte research