The Indian real estate industry has been a strong propeller towards the country’s economic performance. Being the second largest employment generator in India, the sector contributes a significant percentage to India’s GDP (measured at 7.8 per cent in 2013-14).
The sector has come a long way and has been turning around in the last decade from being unorganised to a dynamic and structured sector. Several factors such as young population and nuclear families, increasing urbanisation and rising income levels have driven the growth of the sector. Apart from the aforesaid factors, much of this sectoral transformation could also be attributed to investments by institutional private equity and strategic investors in Indian real estate market.
However, in the periods ensuing the global financial crisis, the Indian real estate sector witnessed sluggish growth and slackening demand from end users owing largely to an economic slowdown and other macro-economic vulnerabilities such as persistent inflation, elevated fiscal deficit, etc. External financing including private equity investments in the sector dropped as well (from the highs of 2005-2008) leading to liquidity crunches in the hands of developers.
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