How has the real estate been faring in India in the last year?
For the vast middle class Indian population, investing in property has been the surest bang for the buck. In the past one decade the value of the properties has quadrupled. However, the big question remains, for how long wills this bubble sustain itself? More on the same and other trends in Indian property scenario.
Indian Real Estate
The real estate industry is one of the major economic influencers in India. This is a vital revenue generating sector, whose growth and depreciation has a direct effect on the economy of the country. Since it came into prominence in the 90’s, the real estate industry has seen a lot of changes. Earlier it was dominated by a handful of players, but now there are tons of companies, developers, investors and stakeholders who literally have made real estate their bread and butter. With the new age globalisation and liberal government policies, real estate industry has grown by leaps and bounds, becoming a key sector to contribute to the growth story of the country.
The past : 2011-12 was a strong period for realtors, and if the experts are to be believed the future is equally promising. The forces that affect the property trends in India include the government’s policy over Foreign Direct Investment. Since it’s advent FDI has always been looked upon as a cloud with a silver lining. That silver lining surely shines for the real estate sector. The arrival of foreign investors almost invariably will lead to greater competition, hence better value-for-money for the consumer. Another factor that has played a major role in India’s real estate development is the ever expanding IT industry. The constant expansion of IT sector has given rise to real estate hubs like Bengaluru, Noida and Gurgaon, to name a few. Owing to the presence of the major IT firms, these cities have witnessed an exodus of corporate and resident migrants. The real estate developers closely follow such changes and target these high net worth individuals, developing world class residential facilities in such places. This trend is not going to change any time soon, although the realtors may have to look for options in 2nd and 3rd tier cities as the demand of residential properties increases.
The present: However, it is a fact that all has not been happy and hay for the sector in recent times. Global economic recession has had an impact in the form of a weakening in demand. Input cost has escalated and land acquisitions have been marred by controversies. To put some numbers in perspective, the start of 2012 saw the economy expanding by 5.3%, the least in nine years. The 2012 budget was also not too favourable for the industry. The first half of 2012 has seen a total absorption of 13.4 million sq feet, which represents a staggering 21 percent decline when compared to the same period in 2011. Currency depreciation is also not helping the cause; neither the government seems to be in a state of taking any major decision. Such political paralysis is further aggravated by the never-ending series of scams.
The future: Such tough conditions call for tough measures and quick adaptability. Successful real estate developers have quite diligently understood the property trends in India and are taking steps to improve the situation. The commercial builders are offering flexible leasing terms for buyers, while the real estate companies involved in residential space are concentrating their efforts on building affordable homes. Also, what could prove decisive in such difficult times would be the ability of companies to use their resources judiciously and liquidate the existing inventories to infuse some extra capital.
Author Bio: Delhi born Saurabh Tyagi has a penchant for writing, which he discovered early on in life. He likes to put pen to paper every now and then for topics such as House For Rent, serviced apartments for sale and commercial real estate property. . Currently he writes on behalf of 99acres.com, a leading real estate site.http://www.allinoneguestblog.com/2013/07/how-has-the-real-estate-been-faring-in-india-in-the-last-year/PhilosophyIndia