The reality sector in india made a paradigm shift in the first decade of the new millenium with unprecedented residential,retail,and commercial realty boom,writes Prabhakar Sinha

The decade , which came to close last week, saw a roller-coaster ride though it started off full of uncertainities and a negative outlook, it is ending on a note of hope and positive outlook.Despite a slow start in the first two years of the new millenium's first decade, the real estate sector witnessed an unprecedented growth during the period.In almost all the major cities and towns of the country, the real estate sector was on a high octane drive,both in capital values and in construction activities.

Along with houses,retail and commercial activies also witnessed a paradigm shift during the period. The advent of malls in particular, in the last decade,changed the way people shop in metro cities.

Infact,this decade has seen a momentous change in the mindset of the people. Till 2003-04, people's first preference used to be a house in the central parts of a city , even if one had to compromise on space and other amenities.But,with the development of condominiums are offering residents, many people now prefer to buy houses in the suburbs.

The main reason behind the robust growth in real estate activities in metros is the strong growth of economy during during the decade. Between 2003-04 and 2007-08, the economy continued to grow in the region of eight percent. Baring the first three years from 2000-01 and 2002-03 of the decade,when the GDP grew at 4.4 percent , 5.8 percent and 3.8 percent respectively, yhe decade witnessed a strong growth. Even in 2008-09 which was badly affected because of the global slowdown, the GDP grew at .7 percent. In the current year also , as per the government's projection, the economy should grow at around 7.75 percent. The  per capita income of an average Indian during the decade more than doubled in the first nine years- from Rs 15,881 to 37,490 - at the current price. If the country achieves a growth of 7.75 percent, with an inflation of six percent, the per capital income will go up to around Rs 43,000.

On top of this , the services sector with an even stronger growth, at around 10 percent per annum during the decade , provided huge stimulus to the realty sector in the cities. The rise of IT and IT enabled Services (ITeS) in the country helped raise the income of city dwellers considerably during the decade. As the income rose, individuals decided to buy thier 'dream home' , even early in their careers.

The easy availiblity of home loans coupled with a fall in the interest rates further fuelled growth in the sector. In 2003, the home loan rate came down as low as 6.5 percent per annum. This brought down the average age of borrowers buying a house,froim the mid forties to late twenties.These developments led to a spurt in demand the decade,which led to a streep rise in property prices.

At the sane time, the rise in the interest rates in 2007 and 2008 to over 12 percent per annum affected the affordability of buyers, which affecterd the sector. The onset of global financial crisis in september 2008 affected the sector further. As the crisis affected the global economy, with developed countries going into recession, it was thought that India would also face a similar fate. But,timely action of the government in providing a stimulus package to the economy back on revival path.

With this, the real estate secdtor also gained momentum in 2009. The good thing is that the slowdown in the sector made developers change their stratergy. Instead of building premium class houses and appartments,where the profit margin used to be high, they turned towards constructing affordable apartments witgh low margins but in high volumes. Therefore,it would not be inappropriate to say that the new decade is starting wiyh a ray of hope and oppurtunity.

A number of new areas are going to come up. Particularly,  the idea of township is going to mature in the new decade,where all the facilities from shopping complexes to schools to playground - would be available at a walking distances. Not only this , many of the townships would be big enough to have office space as well, where residents can walk to work. A number of townships are already being implemented.