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Thursday, April 19, 2007

Factors Behind Real Estate Boom

The hike in interest rates by RBI and regulatory reforms by government made it easy for the non-resident Indians to safe investment of their excess fund in the Real Estate India, their home country.

There is a record breaking increment in the India’s FDI, $11.2bn which is a 155 per cent year-on-year increase. The interest of foreign investors is providing the wheels to Indian real estate market to push it towards $50bn by 2010.

The Indian government made the investment process simple and declared that FDI is permitted in real estate through the automatic route in 2005. There were no needs for ministerial approvals.

This policy was made to develop minimum land areas which required minimum capitalization. But the results came into a huge inflow of the capital. Now it is assumed that capital worth $7bn will be pumped into development projects over the next year, much of that will come from overseas.


It’s not a surprise to see the boom in Indian real estate. The following conditions helped to make it possible.

  • 1.2 billion population of the country which grow annually by 1.4 percent.
  • The economic growth of eight per cent per annum.
  • The competitive interest rates.
  • The growing IT industry.
  • Demand for residential space.
  • Demand for commercial space.

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