Organised Retail To Foster The Indian Real Estate Market

The next phase of development in Indian retail market will be filliped by organized retail, shooting up the demand for quality space (real estate), particularly for shopping malls. These are the results of a recent survey by the ICICI property Services and Technopak, as per the news published on DNA.

The survey suggests that retail market of India is estimated to increase to more than US$ 500 Billion from present value of $330 Billion by the year 2011. This growth will be driven by changing lifestyle, positive demographic patterns and strong income growth. The expansion will create unexpected demand for a minimum 500 Million sq feet of space, where shopping malls will account for 50%.

According to the survey, the high growth in real estate market will see a hike in the employment opportunities. The real estate industry estimate expects the creation of 4.5 million direct jobs in the coming five years.

The survey also point out the factors that might slow down the real estate market growth. It says that growth of Indian retail real estate, especially mall development, has been inclined to poor planning. The result has been improper use of space and poor investment returns.

Along with poor planning in the organized retail real estate sector in India, the verdict of Union Finance Minister to charge 12.5% tax on commercial lease rentals has resulted in a tense situation for real estate market in India. This may add to the property prices further, thereby crippling already suffering consumers, say industry watchers in news published on Indian reality news.

Commercial spaces that include shopping malls and offices have become costly by another 15 to 20% and the houses by 20%. However, the tax doesn't include the residential properties, sports lands, parking & entertainment purposes, empty agriculture plots and immovable properties for religious or educational purposes.

A research analyst at RNCOS said, "In India, property investments are not risk-free. Indian market's market transparency lags behind US or European standards. So it's very important for the foreign investors to have a professional local partner. The lack of liquidity and rising pressure of costs remain the major concerns in the Indian real estate market".