India’s Real Estate Sector will need $257 Billion by 2015: Report

According to a report by EY-FICCI, India’s real estate sector is in need of an investment of $257 billion by 2015. This includes economic weaker section (EWS) housing, of which residential realty itself will require $29 billion.

The report which was released on Friday, stated that investments required in the Indian real estate market by the year 2015, is approximately $42 billion (excluding EWS housing) and $257 billion (including EWS housing).

According to an executive from EY Tax partner, the Indian economy is ready to experiment with advanced funding options. This includes real estate investment trusts (REITs) which also provide industry players with a global competitive edge.

He further stated that the contribution of the sector to country’s GDP was estimated at 6.3 per cent in 2013. Moreover, during the same period, the segment is expected to generate 7.6 million jobs. He further added that by 2025 the sector is also likely to create over 17 million employment opportunities across India.

Housing itself contributes approximately around six per cent to the country’s GDP. On the other hand hospitality, retail and commercial sub-sectors have also grown simultaneously, thus meeting the increasing infrastructure needs, he stated.

According to the report, the development of Delhi-Mumbai Industrial Corridor (DMIC) will set a new model for the development of the logistics and warehousing sector.

The project is predictable to create seven new cities, which includes two smart cities, apart from development of 24 manufacturing cities (investment area and investment region).

All in all, the project comprises of 24 nodes, 13 industrial areas in the DMIC and 11 investment regions, which are likely to be completed by 2025, the report said.

The executive also stated that owing to shooting labour costs and construction costs, numerous real estate builders are falling under high debt. The tightening of the interest rates by the central bank is likely to further reduce the sale of real estate properties, according to him.

The report also stated that the country’s real estate sector across major cities is likely to see a mixed performance owing to these macro-economic conditions.

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