Tier III cities are in realty race and are attracting large interests from real estate developers as well as potential investors. IT/ITes companies and upcoming retailers are jostling hard to make profits on the first mover advantage in these markets. They are counting on the factors like low property rates, availability of vast land, a great workforce, and improving living standards.
The growth of Indian rich and consuming class coupled with dropping rates and other fiscal investments on home loans has been major reasons increasing appetite of the average Indian consumer. This has been further fuelled by growing working population in the age group of 25-55.

As such, the city of rock garden does not have much to offer as far as residential development is concerned. The development has been shifted to the areas of Pinjore, Zirakpur, and Kharar from Mohali and Panchkula. The size of these colonies ranges from as low as 5 acres to as high as 200 acres.
Bhubaneswar is another place which is offering a conducive atmosphere to IT sector. IT majors Infosys and Satyam are planning to spread their wings here. Apart from Infocity-I, DLF is coming up with IT Park in Chandaka Industrial Estate. Genpact has also announced its plans to set up BPO SEZ in Mancheswar Industrial Estate. A bio-tech park is also on the anvil.

Source: Economic Times

With the recent growth seen in the Real Estate Sector in India, everyone is getting attracted towards it. First the Morgan - Stanley Deal in which they invested $150 million in Oberoi Constructions to get a 10.75% stake, making it the biggest deal in the construction space. After that it is seen that Ambani Brothers are on the Real Estate Pie hunt in India. Indian real estate sector has also drawn considerable interests from the Ambani brothers – Mukesh and Anil, who are now showing their inclination towards private equity funds.

Now in this race the latest contender is the TATA Groups. They jumped in the league with a huge amount of Rs 4500 crore. The name of Tata’s newly created company is Tata Realty and Infrastructure, which will make investments in various infrastructure and development projects. The arm is known to have modeled on the lines of Kishore Biyani, promoted Future Group’s Kshitij, says a source familiar with the plan, who did not wish to be identified.
Bomaby House, the group’s headquarter is working on the plans for its new business. As per the changing face of construction and development industry in India, the group is likely to bet big in Indian real estate this time.

Under the government of Mr Bhupinder Singh Hooda Haryana becomes the hub of Special Economic Zones. Haryana has opted for the SEZ route to industrialization and faster growth. Under the Haryana State Special Economic Zone Act-2005, enacted by the Hooda Government, developers of SEZs are given relaxation in state-level taxes and duties. Besides providing conducive environment for growth, SEZs will offer industry global standard infrastructure facilities like airports, railway lines, roads, electricity, schools, hospitals, banks, shopping malls and parks. What's more, entrepreneurs are provided with tax-free enclave, globally competitive surroundings and status of foreign territory for purposes of trade. They are also offered sops like smooth transportation facilities, easy access to domestic and international markets and permission of excisefree receipt of raw materials from domestic levy zones. There can't be better evidence of pro-industrial climate sweeping the state than the fact that Haryana accounts for the largest number of SEZs in the country. It has received proposals for setting up 68 SEZs. Out of these, the Central Government has given clearance to 49 to be set up in various parts of the state. These will bring in investment of the order of Rs 1,75,000 crore in developments of infrastructure facilities and attract industrial investment worth crores of rupees. Besides changing the face of industrial growth, SEZs will seek to redefine the very lifestyle and living standards of the populace of the state.

A recent hike in interest rates and inflation has a far reaching impact on real estate stocks, which are trading at 20%-40% below their 1 December 2006 levels. “Market capitalization weighted index”, SENSEX ran up near 1.77% - from 13844.78 on 1 December to 14,090.98 on 13 February 2007.
Market participants are the situation to be a double whammy of high property rates and increasing interest rates and inflation figures. High prices and interest rates are believed to be the factors contributing to the fact that real estate prices have become stable, says Hitesh Kuvelkar, associate director with First Global, who recently conducted a five city (Delhi, Bangalore, Chennai, Pune, and Mumbai) survey on property prices.
Nowadays, a few people are showing inclination towards making prospective investments in real estate, says Kuvelkar further. Supporting his statement, Rajen Shah, Chief investment officer of Angel Broking too finds real estate prices to have gone through rooftop substantially on land bank stories with unrealistic valuations. The real estate had witnessed a nice hike in the past two years. However, such a correction is needed and good for the market. The fall in real estate stocks may affect plans of the property developers who are planning to raise initial public offering (IPOs).
The inflation does not seem to take a downturn in near future, and the Reserve Bank of India (RBI), while trying to keep it under control, will tighten liquidity further thereby bringing an increase in interest rates. The trend is likely to remain so for sometime as the inflation is an election issue. Likewise, the real estate prices are expected to remain stagnant.
Not everyone is of the same view regarding the increase in prices of residential property. The economy of the country is growing at the rate of 8-9% and salaries have gone up higher seven to eight times as compared to what has been pad the four years back, while there has been no change in the housing loan rates. They are still moving at the snail’s pace.

The state-run National Textile Corporation - has decided to put four more mills in central Mumbai up for auction, a move that could push real estate prices through the roof.The NTC's proposed auction of four mills in Worli and Parel could raise real estate prices in central Mumbai because developers are expected to bid 'higher than-market' rate for the around 40 acres of prime land, freeing it for private developers in this 'land-starved' metropolis. The state-run textile company has already raised around Rs.20 billion from its first phase of sales from the auction of five mills after the Supreme Court lifted the legal obstacle on the sale of Mumbai mill land in March 2005. It now plans to bring under the hammer the 18-acre Madhusudan Mills, in Worli - the largest in Mumbai. The other mills are Poddar Processors and Bharat Textile Mill, also in Worli, and Finlay Mill in Parel. The textile company is awaiting the government's nod to invite bids from private developers. 'Once we get the final nod from the state government, we will invite tenders,' NTC managing director O.P. Agarwal told IANS. Although Agarwal was not forthcoming on the amount the corporation is expecting, property consultants are more than willing to speculate. 'Prices will be as high as, if not higher than, existing rates, with builders from outside Mumbai coming in for bids this time,' said Gopal Sanyal, a property consultant. 'The three mills in Worli could fetch more than the going rate of Rs.20,000 per sq ft and the ones in Parel more than Rs.12,000 per sq ft.' Agarwal, however, admitted that prices have soared since the company last sold its mills. 'Prices soared even over the period we sold our mills in the first phase. While we got Rs.7,000 per sq ft for the sale of the 14-acre Mumbai Mills in Lower Parel -, a months later we got Rs.15,000 per sq ft for the sale of the 4.9-acre-Kohinoor Mills in Dadar, both in central Mumbai,' the NTC top official said.

The state-run textile company also plans to cash in on the booming real estate and plans to develop the land on its own. 'Plans are on to develop real estate on our own. We plan to construct a 72-storeyed India International Trade Tower in the 11.96-acre India United Mill No. 6 at Pravhadevi,' Agarwal disclosed. Kohinoor Mills was sold to Navi Nirman Sena chief Raj Thackeray-Umesh Joshi partnered Kohinoor Constructions, which is building a shopping mall at the site. Real estate prices in Mumbai, which are among the highest in the world, began to rise in 2004 and got a further boost when NTC auctioned its first set of five mills in 2005. But environmental watchers are not amused with the boom. 'The area is twice that of the Oval Maidan at Churchgate and thrice that of Cooperage, both among the only few green spaces remaining in the island city,' said Sonia Fernandez of Bombay First, a watchdog body. 'The state government's policy on the mill land is lopsided. The city's infrastructure can no longer bear the burden of private development. There needs to be some regulation in this madness,' said Sonia. 'The mills of Mumbai have played a major role in the industrialisation of Maharashtra. But the sale of these mill lands remains a contentious issue because some of the 600 acre of mill land was initially meant for public amenities and low-cost housing.'

Source: rxpgnews

Despite the plea by Finance Minister P. Chidambaram to the chief of all the banks regarding the issue of increase of Indian Home Loan Rates, banks are increasing the home loan rates bya steep one percentage. This can directly affect the Real Estate Industry.
The values of residential real estate have remained flat for the last three months and in north India have started falling. The latest rise in interest rates could accelerate the fall, say real estate experts.
Interestingly, prices of commercial property across the country are still going up and analysts expect that trend to continue.

Lets see where it all leads the Indian Real Estate.

Personal and Real Estate Loans as well as credit card withdrawals may become expensive, with RBI on Wednesday asking banks to set aside more money to cover risks on advances to these sectors while raising key short-term lending rates to curb inflation.

While borrowing for buying shares too could become costlier, housing loans may not be impacted as they are not touched by the measures announced by RBI in the third quarter review of monetary policy. In the review, RBI increased provisioning requirement for the four sectors to two per cent. It means that banks now have to keep two paise for every rupee given to these sectors. A hike in this rate is aimed at increasing the cost of retail and housing loans to prevent overheating in these rapidly growing sectors.

Non-residents Indians [NRIs] have recently begun to show immense interest in the real estate market of India. A lot of NRI funds are coming to India, through various channels, to be invested in the real estate industry, as these NRIs want make the most of the opportunities offered by the growing real estate market in India.
We cannot ignore the important aspect of India's government in promoting real estate. The Indian government has played a major role in supporting the growth of the real estate sector by allowing NRI investment and Foreign Direct Investment [FDI] in real estate. With an exceptionally good return on the investment, the real estate sector has become the preferred choice of most of the investors.
Various lucrative avenues are being created and offered to invite maximum investments from abroad. The NRI section has responded quite positively, showing keen interest in India's real estate market. NRIs are investing a lot in residential and commercial properties to cash upon the increasing property demands.