India real estate market volume of residential property investments in India is $40 billion while the volume of investments in infrastructure is estimated to be around $65 billion. Where as for the next five years the annual demand for office space is projected at 2 million sq meters and around 80 percent of the office space has already been leased to major firms.

“In India’s fast-growing economy, real estate has emerged as one of the most appealing investment areas for domestic as well as foreign investors. The real estate sector will continue to derive its growth from the booming IT sector, since an estimated 70 per cent of the new construction is for the IT sector,” a report by PricewaterhouseCoopers

Though the interest rates are higher, attitudes to home ownership (the average age of a new homeowner is now 32 years compared with 45 years a decade ago), economic prosperity along with a change of attitude amongst the young working population is the main force for the boost in real estate market. Real Estate in India is a major contributor to the national GDP. In the absence of any specific measure, due to its complexity and linkages to other sectors, it is estimated to contribute about 14% to the national GDP. However, it is estimated that every rupee invested in Real Estate contributes around 78 paisa to the total national GDP. Total GDP turnover is estimated at USD 12 billion, with residential real estate contributing about USD 10 billion, the rest attributed to commercial and retail real estate.

The growth of Real estate is driven by many factors. The 3 key segments of the Real Estate industry are Housing, Commercial and Retail. Demand for housing has grown on population growth and demographic changes. Factors include an increase in nuclear families, lower average number of members per household and an overall increase in population along with increases in national income and standard of living.” There are no substantial tax incentives for real estate development except in the limited circumstances. Even in these situations, the tax incentive windows have a short life left. The prevailing tenancy laws in India are not in favor of owners of the land,”

The Urban Land Ceiling Act and Rent Control Acts have distorted property markets in cities, leading to exceptionally high property prices, it said. Moreover, a high percentage of land holdings do not have clear titles. “Land is generally non-corporatised and is typically held by individual or families. This restricts organized dealing, and hinders transfer of titles. Legal processes for property disputes are time consuming,” the report said, adding that despite repeated calls for the rationalization of stamp duties, they continued to be as high as 10-13 per cent in certain states.