What to Expect from India’s Real Estate Market in the Coming Months


What to Expect from India’s Real Estate Market in the Coming Months

Although the Indian economy showed promise in 2014-2015, it has not yielded growth in all economic sectors. The real estate industry, for instance, hasn’t been able to grow to the desired level this past year. Let’s look at what’s coming up for the Indian real estate market.

The year 2015 has brought economic strife to some countries, and measurable success to others. India is among the latter category, raking up a 7.3% growth rate in 2014. While e-commerce and technology sectors have directly benefitted from this change, the Indian real estate market, however, has not witnessed positive growth.

Braving the Storm

In a world where countless economies are either crashing or recovering, it might seem difficult to believe that anyone would be doing well during these times. This type of environment is generally expected to place additional pressure on emerging economies, forcing them to focus their efforts into protecting their capital flight.

While India expects to suffer some short-term repercussions within their stock markets in relation to currency, they are also quite likely to receive backing from strong forex reserves totalling around $360 billion. Along with this, the country also plans to remain grounded from resilient macroeconomic essentials such as their improved fiscal and current account deficit.

A Future Filled With Promise

In the fiscal year of 2014-2015, the Indian economy grew by an impressive 7.3%. This was both a welcome and surprising improvement, considering that the country’s GDP prediction for the year was 6.8%. This rate is now expected to continue to grow within the range of 7-7.5% in 2015-2016. This could possibly mean a double-digit rate of growth in the coming years, provided that the country is backed by healthy business environment and policies.

The Beneficiaries

At this moment, the two biggest beneficiaries from India’s regained footing are both the start-up sectors of e-commerce and technology. For the past 3 years, e-commerce companies have caught the attention and pocketbooks of many investors from both India and around the globe. In the first six months of 2015, this sector has attracted an astounding $1.9 billion in investments.

Gains and Losses

As the e-commerce sector has continued to reach new heights, the necessity for large-scale office buildings has also risen, particularly in cities such as the NCR region and Bengaluru. This has created an increase in transaction activity in the commercial real estate market, a growth that is expected to continue in the coming years.

Despite this increase in growth, a sector that has not shown much progress in the past year is real estate. Little to no improvement has been noted with real estate in India’s top 8 cities. Residential sales have dropped by 20% since January, and the number of new units entering the market have decreased by 40% across each city. The NCR region in particular has shown an alarming fall in profit, with an 80% loss in launches over the past two years.

The Future of Indian Real Estate

Pune is one of the few markets to show positive sales in the residential sector this year, causing them to pass NCR as the third largest residential market in the country. While some have hope that the market will pick itself up again, a continuous decline over the last four months does not prove very promising for Indian real estate. Some factors that could help boost real estate in general is efficiency in completing building deadlines, as well as obtaining government approvals in a timely manner.

While these current statistics might seem disheartening, there is some hope. In most cases, the second half of a year is crucially important time period for the real estate market, due to the festive season inspiring things to improve. Only time will tell if India’s residential market will reach a promising level once more. To keep track of the latest happenings in India’s real estate market, check out commonfloor.com for a wide range of realty news.

Picture Credit: Daraious Billimoria

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