In the last two decades India has outperformed and shown a healthy rate of GDP growth rate of more than 7% annually. The major contributors of this healthy growth rate are industries like the I.T., BPO and client servicing industries. This has also made India one of the favourite destinations for Foreign Direct Investors (FDI). As per the latest report by United Nations Conference on Trade and Development (UNCTAD), India has become the third most popular FDI destination in world with staggering figures of US$ 1.74 billion in the month of November 2009 (Maps of India, 2010). All of this has directly affected the real estate industry in India. The sector witnessed an astonishing 35% growth rate in 2009 and estimated worth US$ 15 billion investment came in, making this industry a gold mine for domestic as well as foreign investors. The calculated Real Estate demand for the IT sector in 2010 was projected at 150million sq.ft. within the metropolitan cities of India. As per the growing business needs and requirements, most of the fortune 500 companies are looking to open their Head offices in India which has scaled the demand of premium and luxurious office space.
India Real Estate is also attracting a lot of domestic and international investors because of the high YOY (year over year) returns on investments. As per a very recent study carried out by Makaan.com, property prices in India have increased by an astonishing 18.6% in June’10 when compared to last year’s prices (Property Intelligence by Makaan.com, 2010). The high growth of Indian real estate compared to western markets, has attracted a lot of attention of investors from all around the world. In the scenario of the global melt down, it was the Indian real estate market which was affected least in the Asia Pacific region and turned out to be the fastest recovering market out of all (www.indianrealtynews.com, 2010).

Due to the recession, the luxury market took the major hit but it had again started picking up. As per the latest reports, Singaporean luxury resorts chain Banyan Tree is very much interested in investing in India and is already in talks with a few resort owners in India (Financial Express, 2010). According to the United Nations World Urbanization Prospects report, 914 million Indians will live in cities by 2050, compared to 300 million now. This clearly shows the upcoming opportunities and demands for the real estate market in coming years.
The major hurdles and roadblocks for Indian real estate market are the slow bureaucratic system and the involvement of red tape in it (corruption). This whole issue plays the vital role in slowing down the development of the real estate industry. For instance, in city of Mumbai (considered as the financial capital of India), there is a multi stage certification system which requires around 50 various certificates from various government authorities from the time of commencement of the proposed work, to completion of the work. The duration to get these certificates normally involves a time frame ranging from 24 months to 36 months. This slow process delays the projects from its schedule date of completion and sometimes prices are also hiked artificially for a short period of time (DEVITA SARAF, 2010). At the same point of time, corruption in the system threatens many FDI’s from investing in the Indian Economy, which is therefore considered a loss to the industry. India’s ranking in the corruption list is 84, which itself is a big concern, not only for the real estate industry but also for India’s entire economy, as it creates a bottleneck in the path of the economy’s success (Indian Express, 2009). Despite all these problems, one can’t deny the fact of India’s booming real estate market and its success story. India’s booming economy is repairing as well as advancing at a fast pace and bearing in mind it is a developing nation, one can look for the opportunities and solutions for the hurdles prevailing on the way.

Rising income levels of the growing upper middle class, along with an increase in nuclear families, low interest rates, modern attitudes to home ownership (the average age of a new homeowner in 2006 was 32 years compared with 45 years a decade ago) and a change of attitude amongst the young working population from that of 'save and buy' to 'buy and repay', have all combined to boost the demand for housing and at the same point creating a niche demand for luxury housing too.
Simultaneously, the rapid growth of the Indian economy has also increased the living standard and needs of urban India. As per a study by Merrill Lynch in 2005, India is the second fastest country to produce millionaires in the world. This gives the real estate sector a greater push in the encroachment of the new luxury market as well as in developing a new market segment in India (Swiss Business Hub Russia, 2007).

Another major reason behind the increasing prices of real estate in India is the increased government spending over infrastructure development. The government set in its priorities to provide for better infrastructure for example, building better roads for transportation, setting nuclear power plants to generate electricity for meeting the increasing demand of industries and households etc. All this spending on infrastructure directly affects the prices of real estate and gives them a push. India has kept aside $517 billion to spend on infrastructure for its five year plan, as at 2011-12 and is expecting it to double it to $1 trillion for the next budget of 2016-17 (HT Media, 2010). All these sentiments are triggering the rise of real estate market and the government is expecting a combined investment of $1.5 trillion by various foreign and domestic groups in the coming 2-3 years. At the same point, funds which have invested their money in these groups’ IPO’s (Initial Public Offering) are expecting returns of 16%-20%. The basis of these expectations are on the grounds of the booming I.T. and Outsourcing industries, which has raised the requirements for quality commercial, residential, hospitality and health care facilities (Indian Ground Reality Mantra, 2009).

Understanding the position of India in contrast to various other courtiers in the west like US, Western Europe, as well as Australia is very essential. India is a young country with just 64 years since Independence and more than 40% of its total population in the youth. All these factors taken into account make India a young nation with a lot of challenges which makes it a piece of cake in the list of developing nations. However, before one starts doing business in India, they have to consider the positive and negative points attached to the real estate market in India.