New Delhi: Retail and real estate boom will further roll down in 2008 as these two key sectors are well poised to notch a year-on-year growth of 30-35% and between 40-45% respectively over the calendar year 2007, according to projections made by Assocham.

In 2007, retail sector ended with growth rate of 25-28% as against 35-38% of real estate. Organized and unorganized retail size during the year was an estimated $330 billion which is likely to grow to $365 billion in 2008 and further reach $440 billion by 2010.

Organized retail occupied a space of 1million sqft in 2002, which shot up to nearly 14 million sqft by 2007 and in 2008, space occupation in organized retail is likely to be 16 million sqft with retailers like Reliance, Plaza, DLF, Spenser and Aditya Birla Group going in for major expansion.

India’s FDI’s in retail sector accounts for 22% of its total FDI’s inflow with return on real estate investments to the tune of 22% as against 5-6% of the world’s developed market. Currently, 100 of the world’s leading real estate companies have found a foothold in India’s reality sector and in increased flow of funds has resulted in various policy measures.

About 94% of capital investment in the sector is in Tier I cities of Mumbai, Delhi and Bangalore and with property in metros becoming costly, developers will be seen intensifying their presence in Tier II and Tier III cities.

Reality sector is likely to notch $90 billion by 2015 with demand for commercial and residential property outstripping supply. Home loans formed 11% of total outstanding credit of scheduled commercial banks in March 2005, up from just 2.4% in March 1990; sales value of housing construction witnessed an exceptional leap from Rs17.61 crore in 1991 to Rs4,182.67 crore in 2006. Housing loans grew at an average rate of 47.68% during 2000-01 to 2004-05, subsequently slowing down to an average of 27.85% in 2005-06 and 2006-07.

Key Findings

* Organized retail segment will witness an additional investment of $70 billion by 2010 and 2008

* Investment size would be $25-28 billion with retail growing between 30-35% in next 3-4 years

* In 2007-08 fiscal, total retails’ contribution to national GDP is estimated between 8-10% which would further jump to 12% in the next few years and by 2010 it would be around 22%

* India has emerged as the world’s fifth largest investment destination in the retail sector because of its market and potential

* Retail outlets, most of which are in the showroom category in India are estimated at around 15 million as of now, of which 5.5 million sell food and retail products

* Rural retail in unorganized sector is expected to touch $45 billion in 2010 and in 2015, estimates suggest it will cross $65 billion

* In 2007, rural retail size has been estimated at $30 billion which by 2008, is expected to be around $36 billion

* In 2008, 150 new malls are likely to be added that would capture the larger organized retail market size

* Market size of real estate is currently estimated at $15 billion which has been growing between 35-38% and with investments stepping up, 2008 onwards real estate sector is likely to grow between 40-45%

* A slowdown in metros and large cities would be witnessed by 2010 and reality sector in Tier II, Tier III and even Tier IV cities would peak with dwelling units for middle and lower income groups

* An estimated $10 billion is expected to flow into the domestic reality sector by end of 2008