R E A L E S TAT E
December 2008
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MARKET OVERVIEW
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MA R K E T OV E RV I E W
REAL ESTATE • December 2008
Market overview: Real estate
• Real estate industry is currently estimated to be US$ 48 billion, with a CAGR of 30 per cent • Total economic value estimated to be US$ 40-45 billion accounting for four to five per cent of the GDP • Growth driven primarily by IT/ITeS, growing presence of foreign businesses in India, the globalization of Indian corporates and, the rapidly increasing consumer class providing a huge market potential • The real etate sector is in an early growth stage, can be segmented into residential, commercial, retail and hospitality asset classes • Demand-supply gap across all segments for quality real estate
Source: Industry Sources, E&Y Analysis
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MA R K E T OV E RV I E W
REAL ESTATE • December 2008
Commercial office space
Growth Drivers • Growth in IT/ITES sector at 30 per cent annually (source: NASSCOM) • Significant growth in FDI Market Structure • Dominated by a few large national developers with pan-India presence • Regional players are expanding to achieve a Pan-India presence • Shift in the type of operations from Sale Model to lease & maintain model
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MA R K E T OV E RV I E W
REAL ESTATE • December 2008
Commercial office space
Segmentation • Commercial Space can be classified broadly into Grade A and B • Business activity shifting from CBD to SBD and from Tier I to Tier II & III
12%
Commercial Office Space Absorption Total: 45 mn sq. ft (2006)
8% 8% 20%
Outlook • Commercial market expected to grow at CAGR of 20 per cent to 22 per cent over the next five years • IT/ITeS sector expected to require in excess of 250 million sq. ft of commercial office space by 2012-13
19% 12% 9%
12%
Bangalore Chennai Pune
NCR Kolkata Tier III Cities
Mumbai Hyderabad
Source: E&Y estimates for top seven cities
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