IJMSS Vol.05 Issue-08, (August, 2017) ISSN: 2321-1784 International Journal in Management and Social Science (Impact Factor- 6.178) A Monthly Double-Blind Peer Reviewed Refereed Open Access International Journal - Included in the International Serial Directories International Journal in Management and Social Science http://www.ijmr.net.in email id- irjmss@gmail.com Page 31 REAL ESTATE SECTOR IN INDIA- CHALLENGES AND OPPORTUNITIES Dr. Ruchira Agrawal, Associate Professor, Management SIRTS, Bhopal Abstract The real estate sector is the third largest employer (after agriculture and manufacturing) in India and presently employs over 40 million workforce. India’s construction industry will continue to expand over the forecast period (2016–2020), with investments in residential, infrastructure and energy projects continuing to drive growth. Various government flagship programs – including 100 Smart Cities Mission, Housing for All, Atal Mission for Urban Rejuvenation and Transformation (AMRUT), Make in India and Power for All – will be the growth drivers. There are certain challenges associated with India’s real estate industry outlook. Limited funding, slow policy reforms and a weak currency are factors that will continue to limit the growth potential. Due to industrialization, urbanization, a rise in disposable income and population growth the demand for real estate is set to rise. This paper studies the key policy initiatives of the government for this sector and what the future holds. It is a secondary data based study. Key words: Real estate, GDP, FDI, Interest, Housing Introduction The real estate sector is the third largest employer (after agriculture and manufacturing) in India and presently employs over 40 million workforce. With forward and backward linkages to over 250 sectors and ancillary industries, the real estate sector is the third-highest contributor to the Indian economy. The total market size of Indian real estate is estimated to have doubled since 2008 . The market size of real estate in India is expected to increase at a CAGR of 15.2 per cent during FY2008 – 2028E and is estimated to be worth USD853 billion by 2028. The potential for growth is significant as India would need to develop over 170 million houses until 2030 to meet the needs of the rapidly urbanising population. Contribution to Gross Domestic Product (GDP): The housing sector alone contributes 5-6 per cent to the country's Gross Domestic Product (GDP). Real estate contribution to India’s GDP is estimated to increase to about 13 per cent by 2028. India has the largest housing market in the world, with over 75– 80 per cent share in the total real estate market size in India. Robust private equity investments in real estate: The Indian realty attracted the second-highest Private Equity (PE) investments during 2016, which increased by over 62 per cent y-o-y to INR38,000 crore. However, the Foreign Direct Investment (FDI) in construction development sector remained subdued with only INR470 crore worth of investment reported during January–September 2016. This was primarily owing to foreign investors preferring quasi-debt route, which is not captured in the FDI. . Strong commercial office space leasing: Grade A leasing activity in the commercial office space remained upbeat during 2016, with over 9 per cent increase compared with that of the previous year. This resulted in 2016 recording the highest leasing of over 43 million square feet (msf), primarily driven by IT–ITeS and Banking, Financial Services and Insurance (BFSI) sectors. Due to lack of quality spaces in completed projects, the year saw strong pre-leasing in under-construction projects, contributing to nearly one-fourth share in the total leasing during the year. Housing credit: The institutional credit to the housing sector is estimated to have grown by about 19 per cent during FY16. As a result, the total outstanding credit to the housing sector has reached INR12.5 lakh crore.There is still significant potential for credit growth as mortgage to the GDP ratio in India is only 9, far below than in the developed countries, such as the U.S. (68 per cent) and Germany (42 per cent). [Type the abstract of the document here. The abstract is typically a short summary of the contents of the document. Type the abstract of the document here. The abstract is typically a short summary of the contents of the document.]