Foreign direct investment in the country's real estate sector is likely to rise to a whopping $25 billion in the next 10 years from the present $4 billion, even as the industry faces a slowdown in the short term due to rising interest rates, an Assocham study said.
“Despite real estate market confronting a temporary depression with real interest rates hovering between 12-16 per cent, FDI in real estate market would increase by about $21 billion to touch USD 25 billion in the next 10 years,” industry chamber Assocham said in its latest study.
At present, the domestic real estate market is estimated at $15 billion, of which FDI contributions are about $4 billion, it pointed out.
“In future, higher interest rates would subside with India scaling a GDP growth of over 10 per cent for at least a decade, and create a huge space for overseas investors in its real estate sector,” Assocham President Sajjan Jindal said.
Real estate in India would be a hot market and investors are constantly looking at India for parking their surpluses as returns on such investments would be the highest in the near future, the study said.
The sector would grow larger as the IT sector alone is expected to require about 200 million sq ft of space across the major and large townships, it added.
It is also estimated that in India's residential sector, housing shortage is around 20 million units. About 100 million sq ft is likely to be added by end of 2008 from over 300 mall projects.
Source: Economic Times