Smaller cities to fuel real estate growth says new report

New Delhi, India, September 20, 2007 - As many as 11 tier II cities in the country are all set to transform the realty landscape of India, says a FICCI-Ernst & Young report on the Indian real estate sector. The FICCI-Ernst and Young Indian Real Estate Report, 2007: Growth and New Destinations, the highlights of which were released, reveals that besides eight metros, cities such as Surat, Chandigarh, Nagpur, Vadodara, Visakhapatnam and Jaipur are experiencing initial phase of rapid economic growth.

This growth is attributed to increased investments across industries including IT/ITeS, improvement in infrastructure and urban governance, rapid influx of knowledge industry professionals, improvement in quality of life and rising prosperity. The ratings are based on five critical indices, city prosperity, urban governance, business environment, quality of life and infrastructure, encompassing 55 parameters.

These cities have been rated as B++ in the E&Y India City rating. Delhi and Mumbai rank first and second respectively with A++ ratings, followed by Bangalore, Chennai, Hyderabad, Kolkatta (with A+ rating) and Pune and Ahmedabad (A).

With the Indian real estate sector clocking a growth of more than 30% per annum, this has shifted the focus of investors and developers to relatively smaller cities and hence there is a likelihood of such emerging cities leading the transformation of the Indian real estate sector, according to Ernst & Young's Ganesh Raj.

As a part of this report, Ernst and Young also conducted an investor’s survey on their views on the current state and future prospects of the real estate sector in the country. 80% of the respondents believe that in the short to mid term, India as an investment destination is 'excellent' or 'very good' compared to other Asian markets like China, Vietnam, Malaysia, Indonesia and Thailand. 50% of the respondents believe that high trajectory growth would continue for next 2-3 years. 20% believe that more than $20 billion would be deployed into Indian real estate over the next three years .

FICCI Secretary General Amit Mitra said, "We are going to see a major development in the future where housing industry defines the flip-flop of growth and expansion as in the US. We are moving in that direction."

The report, which will be released on September 27 at FICCI's International Real Estate summit to be held in Mumbai, also found out that education, healthcare and medicities are the new avenues that are available for developers, Raj said. Information on FICCI's International Real Estate Summit 2007 can be found at the link below.

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source: inrnews.com