Narains Corp - On the growth path - 19th November, 2005. Times Property (Times of India)

On the growth path - 19th November, 2005. Times Property (Times of India)

The past two years have witnessed steady growth both in terms of investments as well as demand

It is a universally acknowledged fact now that India is on a growth path with a significant element of consistency and fundamental strengths to boot; something which is expected to fuel the drive into the future, at a faster pace. Economic indicators such as the GDP (Gross Domestic Product), Per Capita Income, Forex reserves, FIIs (Foreign Institutional Investments) and industry growth rate which includes the manufacturing and farm sector are all at their record highs. Add to that a throbbing stock market and a significant shift from a traditional agriculture and manufacturing based economy to a service oriented one, especially in the urban and semi-urban segment - factors which most economists would endorse.

While it is an accepted theory that real estate is among the most significant contributors to the GDP in any growing economy, it is no different here. The past two years have witnessed steady growth both in terms of investments in this sector as well as demand, which has further resulted in exciting capital appreciation across the country, especially in "A" and "B" category cities and towns. More so in the case of the housing sector, the rise in demand has been meteoric. Rationalizing of interest rates, higher per capita income and increased employment opportunities have thankfully ensured that demand is higher from end-users rather than from speculators.

Capital values in the past two years have grown in a bandwidth of 20% to 40% varying between respective geographic locations and price/ product segments. Mumbai, Delhi and their respective suburbs have predominantly witnessed the highest growth; what with some projects being benchmarked against global standards. Also, quite a few homegrown family run property development companies have truly gone professional while facing competition from real estate offshoots of larger corporations from the organized sector.

A brief synopsis of the current scene:
Real Estate Market Size
US$ 12 billion and growing at 30 per cent annually. 100 per cent Foreign Direct Investment permitted in integrated townships. Demographic Profile: Total population below 25 years of age - 547 million.
Strengths
After United States, India is home to the largest English speaking manpower. The Indian economy is now ranked 12th in the world in terms of GDP. Large and growing domestic market; increasing purchasing power and consumerism. Provides opportunities for competitive advantage (low cost sourcing of products and services; exceptional quality; intellectual skills etc.
Weaknesses
Bureaucratic hurdles and government processes resulting in a difficult operating environment Low average disposable income, a highly dispersed population and distinct tastes from the rest of the world Weak infrastructure in terms of roads, power, and port facilities.