10 Things You May Not Know About Real Estate In India

The Indian real estate sector is fast growing and is globally recognized as a good investment option. Experts in the industry estimate that by 2020, the realty market in India would touch USD 180 billion. If you have invested in this sector, you might be interested to know that the increase in market size is expected to be at a CAGR of 11.2% for the period 2008-2020. For those who are still new to the sector, here is a list of ten things that you perhaps do not know about the Indian real estate:

1. The Indian real estate sector comprises of four sub-sectors. These encompass residential, hospitality, commercial and rental property.

2. The growth and development in the real estate sector vastly depends on the development in sectors such as entertainment (cinemas, hotels), retail, economic services (hospitals, schools) and ITeS (call centres).

3. Globally, India ranks third for the most LEED (Leadership in Energy and Environmental Design) certified space – nearly 12 million sq. m.

4. The slump in the realty market might have led you to assume that the demand is slow. In reality, the available real estate solutions are nowhere close to matching the demand in the sector.

5. Traditionally, investment in real estate, including in under construction properties in India, has been considered a lifetime commitment. Therefore, the trend has been to prefer rental over owned property in India. So, majority of the people do not own their shops, offices or homes.

6. With the banks competing aggressively to provide lower interest rates and better terms for home loans, the buyers today are in a position to own new apartments in India at lower costs. The attractive EMI options that banks are offering are way cheaper than the monthly rentals that you pay over a prolonged period of time.

7. First-time buyers of upcoming flats for sale in India tend to form a perception that higher costs equal better quality. For example, if they are presented with two options, one selling at Rs. 2,000 per sq.ft. and the other at Rs. 3,000, there is a tendency to assume that the higher costing space would have better quality fitting etc. This is not necessarily true since price varies according to location. Thus, price is not a good indicator of quality.

8. There is a general feeling among the public that real estate is a good way to make easy money. However, the truth is that the realty market has to follow very stringent norms and much effort is taken to complete commercial or residential projects in India.

9. With the increasing costs of material and labour along with indefinite delays, the final construction cost increases as well. However, since the market has been facing a slump since FY2008, the builders are forced to offer the projects at throwaway prices to boost sales. The public opinion is that the builders keep a huge margin, but in the present that is just a sad myth.

10. During registration, when buyers come across the term “super built-up” and an additional charge for the same, they often see it as a fraudulent charge and claim that the builder is trying to take undue advantage. However, it is actually permissible by the Indian government. The term ``super built-up'' takes into account the costs incurred in providing common amenities such as lobby, lift area, corridors, etc, and proportionately divides it among the flat holders.

The Indian real estate market has seen tremendous growth recently due to increase in demand. Some of the factors that have influenced this growth are the growing population, rural-urban migration, growing income and disposable income level, increase in job opportunities, easy availability of bank financing and rise in nuclear families.