Alternative Investment – Indian Real Estate Market.
Introduction to Alternative Investment.
Looking back at early 2000 of Indian real estate, it was more of the unorganized sector. In the initial stage, the real estate was very cheap compared to the global market. It was less attractive due to the lack of cash inflow in the sector. As foreign investment started pouring in with new opportunities in Indian growth story things changed forever, Since then it never looked back, the returns of the real estate sector from 2004 to 2012 were all-time high with a high valuation. As the valuation increased in comparison to the global market, the sector suddenly inaccessible to the middle-class segment. But one thing remained consistent, still, the majority of the sector is unorganized with more cash deals common at the ground level.
Potential of Market for Alternative Investment.
The real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13 percent of the country’s GDP by 2025. Considering the growth opportunities in the market there is a lot of interest from the investors across the world in the sector. Due to the rapid urbanization and lower job opportunities in rural India, there will be a large movement of population from the rural area to the top 50 cities in India. There will be a huge demand for real estate in residential, education, e-commerce, office spaces, healthcare, commercial shops, warehouses in urban India by 2030. This is going to a huge attractive asset class of investment for the investors.
Investments in Alternative Investment
Due to the huge demand for real estate as an asset class, there will be a lot of investments in the sector in the coming decade. Since the Government of India allowed 100% FDI in the commercial and township area, we could expect great interest from the investors across the sea. Considering the potential of the industry we could expect about 15% compounding return over the decade in the sector with the growing requirements in the sector. The country with 1.25 billion people will always have a demand for real estate. Real estate investment avenues like Venturecircle or any equivalent credibility are growing to provide huge opportunities for small investors to be part of big projects and benefit from the investment.
With continuous effort from the government to improve the real estate sector and its commitment to provide a home to all by 2022, it’s going to play as a key part of Indian GDP. It’s wise to create a portfolio of real estate to benefit the growth of the sector.