Real estate India expects to get rid of the sluggishness. The year 2012 was really a sluggish year for the real estate builders.
Real estate India is expected of gaining a boost from the retail FDI policy. The increased demand for retail spaces prompts the real estate players to construct more commercial projects. This in fact leads to real estate boom in the country.
Commercial real estate prices have risen sharply in India, especially in its big cities. Yet quality retail spaces available for rent are minimal. Thus the real estate experts predict a boom in construction. This will be all the more boosted by the entry of foreign multi-brand retailers.
Lok Sabha, the lower house of Parliament, voted in favor of retail FDI last week. The government won the favor of Rajya Sabha as well. With these there are more chances for reforms.
State governments are vested with an option to forbid big foreign retailers from entering their state. Foreign retailers’ entry is approved with a number of conditions. Yet the joy of real estate buildershas no bound.
In fact the real estate builders will be the most excited group to welcome the foreign multi-brand retailers. Some real estate builders opined that they would be able to find the necessary funds for their projects. There will be a boom in real estate India, especially commercial sector, with the arrival of foreign retailers.
Commercial establishments and shopping centers are expected to have a boom in the country. Though the foreign retailers are allowed to obtain land in the country, setting up of their own shops will consume more time. Further, they are restricted to buy and sell undeveloped land.
Foreign retailers have to face many other regulations set by the Department of Industrial Policy and Promotion of the Ministry of Commerce and Industry. Thus, the best option they have is lease properties.
This will increase the demand for commercial properties in India. There is said to have a higher demand for the short- term. There will be higher demands for the commercial properties in bigger cities like Mumbai, Delhi and other equivalent cities.
The possibility of this short- term demand to remain for long term depends on how the foreign retailers face the hurdles in setting up own building. Anyway the lack of quality commercial office spaces will tempt the real estate builders to construct fresher ones.
There are many malls under construction. These will be completed only after a couple of years. The reports show that there won’t be a marginal increase in rental rates. This is because the present rental rates in many of the biggest metropolitans are already unaffordable, reported Pankaj Renjhen of Jones Lang LaSalle India.