While the Indian property market has seen steady growth in 2014, the market is fraught with speculation as to whether 2015 will see a positive turnaround in terms of growth and expansion. This article examines some of the subtleties that indicate how volatile real estate in India will react in 2015 and what it holds in store for real estate developers and homebuyers across the country.
Status of Indian Realty in 2014:
In 2014, the Indian real estate sector impacted the business sentiment of the market due to increases in commercial property prices and an increase in demand for residential buildings. In the same year, the Indian government announced various policies and measures aimed at strengthening the Indian real estate sector.
For example, the government announced an amendment to the Land Acquisition Act Ordinance to simplify land acquisition procedures that are hampered by the current consent clause. The latest result of the announcement is that the construction works of various projects will be accelerated in the future as the lack of a consent clause will streamline the land acquisition process for builders and they will be able to complete their projects faster. It will also help the Indian government to realize their dream of “Home for all by 2022”.
Once implemented, the relaxed norms on land acquisition laws will fuel the expansion of Indian real estate. Additionally, various multinational companies got into the Indian real estate sector because they wanted to earn big as the country’s real estate sectors offer a wide range of growth and income opportunities. Also, some recruitment agencies predicted that there will be multiple job opportunities in information technology and other sectors in the country, leading to an expansion of Indian real estate sector in 2015. Why? Well, job creation will empower people financially and they will be able to afford luxury housing in the coming days.
explain the consent clause
According to the consent clause, real estate actors must obtain landlords’ permission to use their land for the construction of their (real estate actors’) housing projects. As a result, builders suffered huge losses as landlords delayed permitting. As a result, builders have had to pay penalties to buyers for not delivering housing projects on time due to the delay in land acquisition approval.
Indian Realty 2015: Turnaround Opportunity
The formation of a new government in India in 2014 and the later announced reform policies and measures have boosted the sentiment of Indian real estate with feel-good factors. For example, the Reserve Bank of India stated incentives aiming to increase infrastructure funding and keep the real estate sector afloat with enthusiasm. In addition, the government stated that it would increase the norms for foreign direct investment (Foreign Direct Investment) in Indian real estate which, if implemented, will drive cross-border investment and give a financial boost to the real estate sector.
They are the factors that will determine how the Indian real estate sectors will be impacted in 2015:
Stable inflation – This is one of the most notable factors indicating positive growth in Indian real estate industry. With higher inflation contributing to a slump in real estate, Indian real estate sectors will not face an ominous spike in real estate inflation this time around. Therefore, real estate prices across the country will not increase, which will increase the sales volume of real estate in the country.
In addition, the RBI (Reserve Bank of India) is expected to lower its repo rate. When it happens there will be easy EMI offers from the banks for homebuyers on their dream homes. Even hesitant buyers who have been waiting for real estate prices to drop will buy their dream homes with a simple EMI payout from their lending banks. In fact, lower lending rates are a win-win situation for both buyers and builders. Builders can sell their projects to buyers, and buyers receive homes at a lower EMI payout.
The Indian real estate industry is in a phase of reorientation. For example, builders are focused on developing low-cost housing projects for middle-class clients. However, there has also been the development of luxury buildings/villas on a large scale to serve the purpose of buyers who are looking for a relatively more comfortable, spacious and higher quality place to live.
Key reasons pointing to a positive turnaround for Indian Realty in 2015
According to the National Housing Bank (NHB) report, real estate is one of the key drivers of job creation. The overall contribution of the real estate industry to the development of schools, townships, apartments, hospitals and other residential segments also dominates the market share. Manufacturing is directly influenced by real estate and more than 35 million workers are employed in the real estate sector. They point out that Indian real estate is full of potential to deliver desirable growth and can have a powerful impact on investors.
India’s new government has visibly excited the real estate market. As expected, the government has been proactive in trying to boost business confidence among investors, builders and buyers by announcing various reform measures such as:
Well-known agencies such as the World Bank, Moody and the IMF forecast that India’s GDP growth will increase by 6.3 to 6.4%. As a result, market sentiment continues to improve. Also, the declining value of the Indian rupee in the international market, improving export and flexible land acquisition laws in India will boost the country’s real estate market in 2015. Recently, in 2014, the country saw increased consumption of commercial real estate by foreign companies. This is an important turnaround despite the country’s economic slowdown in 2014.