Chapter 8 - Real Estate

Abstract

Real estate markets in most countries experience cycles. The supply and demand for real estate are rarely in balance for long. This chapter deals with information related to real estate investments in India. In India, the property market is long-term bullish, being driven by both population growth and strong economic development. There are periods of under-expansion and over-expansion on the supply side of the market with prices and lease rates reacting accordingly. But the press of population and economic growth require a long-term expansion in residential, commercial, and industrial real estate development. The market is diverse, offering many different property types and forms of investment. In general, the country is growing more open to foreign investment. In addition to the usual real estate cycle-driven price risk, there is also some degree of both regulatory risk and corruption risk. Within the commercial sector, there are many IT parks being developed; within the industrial sector, there are many Special Economic Zones (SEZ); and within the residential sector, there is a specific, high-profile category called slum redevelopment. Residential property values in many parts of India have risen substantially. The SEZ is a geographic area within a country that for some period of time is completely or largely exempt from taxes. Governments allow the creation of these tax-free areas in order to stimulate economic activity and employment growth.