An analysis carried out by the ASSOCHAM, `Emerging Age Trends for Buying Dwelling Units for Self-Use’, showed that from 2000 onwards, the age group for property registration for personal use iwas between 30 to 38 years, compared to an age between 55-58 years for buyers twenty years ago. The feedback to this effect came to the ASSOCHAM from real estate developers like DLF, Prasvnath, Omaxe, Unitech etc.
The Chamber’s analysis also unveils that just as the age group for buying houses has settled between 30-38, likewise introducing renovations in dwelling units has also come down by 15 years as 20 years ago, introduction of renovation activities would happen at the age of 60, it is now come down on an average to 45 and 48.
The main factors responsible for the emerging trends include high rentals, non-sustainable lease agreements between property owners and those of tenants, rising income levels and easy availability of housing finance, says the ASSOCHAM analysis.
Releasing the analysis, the ASSOCHAM President, Mr. Venugopal N. Dhoot said that the pervasive impression is that due to highinterest rates, number of aspirants forhome loans have declined but the fact remains that the effective interest rate on a loan of Rs.15 lakhs works out to 6.1% upon an interest rate charged at 11.25%. This rate of 6.1% is effective after home loan seekers has availed of all tax benefits and this is one solid reason which encourages youngsters between age group of 30-38 to register properties in their name for self-use, clarified Mr. Dhoot.
20 years ago, the availability of housing finance was limited.
As per estimates made by ASSOCHAM, in the next 5 years, India is estimated to require investment worth $ 25 billion within the urban housing sector. This again has opened up opportunities for foreign investment in the realty sector. An estimated $ 12 billion of investment has been pledged by foreign and domestic funds over the next couple of years. The forecast commercial space requirement until 2008 stands at 42 million sq. ft. The average return on investments on commercial property in India is at a promising of 10-12% in comparison of 5-7% globally.
Assocham believes that foreign direct investment in Indian real estate would also make its working more organised. Besides increasing professionalism, it would bring in advanced technology and help in the creation of healthy and competitive market environment for both domestic and foreign investors. Moreover, the accelerated development in segments like retail of IT/ITeS office space, coupled with an ever increasing demand for quality residential property, points to a healthy prospects for the realty sector.
If the real estate sector has to thrive and grow, investment in this sector has to become broad based and the common man must have an opportunity to participate in the growth of this sector. The time is probably ripe to introduce concepts like REITs not just to broadbase participation in this sector but also increase the velocity of transactions in this sector.
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