Real Estate Growth Driving Related Industries

Real estate growth in India is pulling the support industries along with it. For example, Rs. 30,000 crores furniture industry is piggy riding on the real estate market, with demand for home and office furniture soaring. Though 85% of the total furniture market is in the unorganised sector, many are foraying into this by bringing in organized retailing in a big way. European furniture market research institute CSIL Milano has classified India as one of the 14 large markets, clubbing it with countries like Canada, Australia, Belgium, Greece and China.

The Indian furniture market is segmented into home and office furniture. Home furniture accounts for nearly Rs 10,000 crore of the market, and the organized players control only 10% of this. Godrej has 25% of the market share in this category followed by other retailers like Style Spa and Durian. With changing taste in design and big growth in the real estate the furniture market is growing at a faster pace. India has emerged as a key FDI destination as foreign investors earn high returns in India than other emerging markets such as China, Brazil and Mexico. Many foreign companies are collaborating with smaller local firms to take advantage of demand. India alone has a middle class population of 400 million+, with the opening up of the economy and unhindered imports, the market is booming.

Today the consumer has access to large catalogues and an opportunity to pick up some of the best from Italy, Malaysia, Indonesia, US, UK and Australia. Showrooms across the country display imported furniture alongside their Indian counterparts.

Godrej has brought its entire, range of home, office and special range of furniture businesses under one umbrella brand, Godrej Interio, has ramped up its expansion plans in a big way. It is targeting 33% growth, made huge investments in technology and brand building. Office furniture is the major contributor to the growth of this industry, fuelled by the ITES/IT companies setting shops in India.

Demand for branded furniture is creeping up with people realizing the value of quality and aesthetics with an international feel. Exciting sectors such as hospital and stadium furniture are also waiting to be exploited.

According to the latest KSA Technopak, durables purchases peak in the 20-34 years age group – double-income couples setting up households are possibly the driving force. The neighbourhood carpenter or the upgraded craftsman who designs with an eye on foreign magazines no longer satisfies the consumer with international exposure.

The furniture industry in India employs an estimated 300,000 workers. In 2000, India ranked 48th among furniture exporters and 49th among importers. This low rank may be explained by relatively high import duties and low technological competency. Also, local tastes play a major part in this sector’s demand. World-class buildings are incomplete without furniture that flaunts global standards. India is waking up to international trends and though our carpenters are a capable lot, the market needs regulation to make it more consumer-friendly. With international furniture companies setting up shop here and domestic companies reinventing themselves the market is set for competition.