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Introduction
Real estate price index (REPI) is a valuable tool for countries in assessing and valuing real properties. Valuations of real properties are used for different purposes - acquisition and disposal, mortgages, taxation, land and property management, among others. Most countries however do not have an established system of real estate prices. In fact, there is no international standard practice for real estate pricing at present.
This paper discusses the development of REPI in Indian context, its need and benefits to different users. It also considers the strategic issues that arise in connection with the future evolution of statistics on real estate prices and argues for the development of a conceptual framework based on a systematic analysis of user requirements in India. Such a framework can then be applied to form a REPI depending on the amount of data available from the national sources. It then lays down the structure of the possible REPI that India can adopt and different issues involved with construction, maintenance and governance of Index. In the end it also discusses the future of REPI, taking a clue form the developed markets.
Real Estate Scenario in India
Real estate industry in India is estimated by FICCI, to be around US$ 14 billion.
Growing at a pace of 30% for the last few years.
Almost 80 % of real estate developed in India, is residential space and the rest comprise office, shopping malls, hotels and hospitals.
ICRA ranked construction industry as 3rd among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.
It is expected to double its contribution to the country's GDP (gross domestic product) to 2 per cent.
Currently, India has a shortage of 20 million units.
The demand for housing is expected to rise to 80 million units by 2015 and 90 million by 2020.
This is just an indication of the extent of real estate development taking place.
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* Contributed by: -
Rahul Abrol & Rahul Gulati,
MBA - IInd Year,
Institute of Management Technology, Ghaziabad.
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