ABSTRACT
The purpose of the study was to: (i) examine the relationship between investment in the real estate sector and GDP; and (ii) analyse the financial parameters of the Indian real estate industry. A simple linear regression analysis was used to test the relationship between investment in the real estate sector and GDP. The results indicate a positive relationship between both variables. A financial analysis was carried out by taking financial aggregates, financial ratios, ratios pertaining to margins on income, returns on investments and the efficiency ratios of the real estate industry in India. A financial analysis of the Indian real estate industry reveals that: (i) it is yet to recover from recession; (ii) the profit generated during an accounting period against the total income generated has continuously declined in recent years; (iii) the operating profit is decreasing; (iv) the returns on funds provided by its equity shareholders have declined considerably; (v) profitability as a ratio of capital employed is currently on a downward trend; (vi) there is a drastic slump in the returns generated on the total funds deployed by it in the business; (vii) there is a drastic fall in the returns that the Indian real estate industry generates on its fixed assets; (viii) asset utilisation points to a trend of increased expenditure; and (ix) it is only able to pay a minimum amount of returns.
