The real estate market in India is growing at the pace of 30% for the last few years. FICCI has estimated the size of this market to be around US$ 12 billion. The reason for this booming market is that the Government has allowed 100% of the foreign direct investment in real estate sector in India. Also with the emergence of outsourcing businesses has increased the demand for office and residential space by many folds. Businesses like high-end technology consultancy, software-programming houses, call centers etc have accounted for around 10 million sq.ft (in 2003-04) of real estate development. Only 20% of the developed space is for offices, hotels, shopping malls and hospitals and the rest 80% is for housing purposes. 

Now Government is keen to attract foreign investment and also to develop adequate infrastructure in the country. This is the best time to invest in this sector as the industry is growing. INR 0.78 is added to the country¡¯s GDP for every 1INR invested in construction industry. The real estate sector in India is also undertaking the construction of over 250 other ancillary industries. Such a wide coverage has ranked construction industry as 3rd by rating agency ICRA among 14 major sectors, which have direct, indirect and induced effect in various sectors of economy. And is ranked 2nd only after agriculture in generating employment in India.

The rise in demand for space by IT sector has also affected the urban layout in India. It is estimated there will be the demand of around 66-million sq.ft space in next 5 years. Many multinationals are relocated in India because of low costs skilled manpower and logistics. For their workers, these companies require substantial space for work and residential purpose, which results in the development of other infrastructure as well. The general trend is to build world-class business centers. These unique campus-style establishments are also called as temples of modern India because of their extent and importance. Big groups like Holiday Inn, Marriott, and Orchid etc for the last five years have either started their own real estate company or have tied up with existing local builders. This has resulted in major boom in hotel project developments in next five years.

Though the prospects of real estate market in India is incredibly intense but this industry has its own shortcomings. It is affected by market uncertainties and inhibitions. The main reason why the real estate sector is not able to grow to its full potential is unorganized and fragmented sector. Small players who have only local presence mostly comprise it. This most promising sector today is affected by very low mortgage penetration. The mortgage to GDP ratio in India is only 2% as compared to this ratio in USA to over 51%. One solution could be to benchmark with one comparable counterpart which will led ratio to range between 15-20% for south east asian countries. Thus the industry has its own share of problems but in spite of this its future is very promising.

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