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The Indian population boom continues and the need for more residential space is increasing. Cushman & Wakefield estimates that the country’s major cities will need a total of 2.1 million new housing units to meet expected demand by 2016. The firm also predicts that 18% of that demand will occur in India’s eight largest cities that include Kolkata, Pune, Mumbai, Bangalore and Chennai. The surge in population is matched by economic growth in many of these large cities, which in turn draws more settlers that then further increases the population. For more on this continue reading the following article from Property Wire.

India’s major cities will need another 2.1 million housing units in the next five year to meet demand, according to a new report from real estate consultants.

More than 50% of this need will be for properties in the mid-income segment, says the report from Cushman & Wakefield.

Around 18% of this demand is likely to be concentrated in the top eight cities including Mumbai, National Capital Region, Bangalore, Chennai, Pune and Kolkata.

Also across the whole of India some 11.8 million units will be needed by 2016, the report also predicts. The figures are based on past trends for population and household growth and the income classification for households.

Of the total additional demand in the top eight cities, demand for mid-segment is estimated to be highest at approximately 59% or 1.3 million units, followed by demand in the high end market for 451,000 units. The low end segment is expected to demand for 362,000 units.

‘The demand in the leading eight cities is a reflective of the economic strength that these cities have, that attracts new settlers as well as creates a conducive environment for natural population growth,’ said Sanjay Dutt, executive managing director of Cushman & Wakefield India.

‘We see a higher demand in the mid ranged segment in these cities that further explains that there is a rapid growth in the economically viable population in these cities which is helping them and the cities in creation of wealth,’ he added.

The total demand for housing units is expected to increase at a Compounded Annual Growth Rate (CAGR) of 2.8% across India, with Bengaluru expected to the record the highest at 4.1% followed by Pune and Hyderabad. NCR is expected to see the highest demand of 381,000 units in mid and high end segments from 2012 to 2016.

In the south Bengaluru is expected to see the highest demand for 338,546 units, Chennai 257,796 units and Hyderabad 199,575 units, or around 45% of the demand in the mid and high end sectors.

In the western region, Mumbai is expected to see a demand for 188,708 for mid and high end units while demand in Ahmedabad is predicted at 173,394 units. Pune is estimated to need 144,422 units while Kolkata’s mid and high end demand is predicted at 77,000 units.

‘The residential housing demand can be seen as an indication of the current and future economic activities in these cities. The majority of the growth in demand in the top eight cities is expected to come from the services sector, in cities of Bengaluru, Hyderabad, Mumbai and NCR. Pune and Chennai will see demand on account of both services as well as manufacturing sectors,’ explained Dutt.

‘Ahmedabad’s demand, in addition to migrant population, is driven by an indigenous growth in population and also many re-settlers who intend to return to the city after having spent a fair deal of time in other locations across the globe,’ he added.

Gurgaon is emerging as a hotspot for luxury residential housing with some projects selling at around Rs30,000 per square foot whilst most other high end projects are selling at around Rs14,000 per square foot. At the opposite end of the scale in Greater Noida the current rate for high end apartment projects is around 6,000 to Ra8,000 per square foot.

Bengaluru is expected to be the most active residential market in the next five years. The demand for residential units in the mid and high end categories is expected to be 191,708 units in the next five years.

Of the total demand in the two categories, new mid-ranged demand would be approximately 75% with only 68% of the necessary supply currently in the pipeline under various phases of planning and construction.

This article was republished with permission from Property Wire.