29th January, 2014 Source:The Times of India
Indian economy, facing slowdown for some time now, is poised for a recovery in 2014, experts and the market trends suggest. As inflation has come down to around 6%, the RBI and other government agencies are likely to take progrowth measures to give a fillip to the economy.
India realty sector will be back on track soon
The Times of India
Indian economy, facing slowdown for some time now, is poised for a recovery in 2014, experts and the market trends suggest. As inflation has come down to around 6%, the RBI and other government agencies are likely to take progrowth measures to give a fillip to the economy.
At the same time, the likely revival in the global economy including that of the US will also provide an upward push to the growth of Indian economy.
Experts also say that as the country is going for general election, a strong, stable, and business-friendly leadership will certainly help the recovery. However, a senior consultant said the economy has its own dynamics—whichever party forms a government, ultimately, businessmen will invest to make money if there are opportunities. A business-friendly government may add to the growth by two to three percentage points over a non-business friendly government, the consultant said.
Various reports by research firms suggest that Indian economy is likely to see a high-growth momentum in the second half of 2014-15. At present, the market is expecting that the RBI will cut its benchmark interest rate to indicate the softening of lending rates in the country and provide the required growth momentum to the economy.
All these measures and global economic conditions will help the real estate sector in the country, too, and it is certain to register higher growth than it did in the last couple of years.
Om Ahuja, CEO of residential services, Jones Lang LaSalle India, says: “Considering that sentiments are all set to improve on the back of increased corporate earnings and a revitalized capital market, the current sluggishness in property sales can continue for a maximum of two more quarters. This interim period is crucial for property buyers and investors, as the currently available deals and offers will continue for this period. The basis for this prediction is not conjecture, but the visible presence of economic factors that drive growth in the real estate sector. From this point onwards, the clock is ticking and the countdown has begun.”
Property prices, contrary to the general perception, are not likely to fall—in fact, prices have not fallen in the last one year very appreciably despite slowdown in the sector. Therefore, experts suggest that that those who want to buy their dream home should not wait for prices to fall. It is better that they enter the market now and avail the current discounts that developers are offering owing to the slowdown in the sector.
Ahuja said that over the last few months, many research and media reports have spoken of excessive real estate supply and sluggish demand across many Indian cities. In such an environment, developers roll out discounts and extras that are not part of normal offers. Despite sporadic incidence of such offers in some cities and locations, this trend is by no means a common one; it is limited to developers who are struggling to attract demand, Ahuja says.
More pertinent to real estate is the fact that once the positive sentiment gathers forward momentum, fencesitters will rush to buy apartments, Ahuja says. This will be a key trend to watch, especially in cities that are directly catering to these sectors—specifically Chennai, Bangalore, Hyderabad, Pune, and Gurgaon.
Evidently, looking at the macro picture is becoming crucial when it comes to property investments. With exports-led sectors set to flourish in the improving economic climate, further fuelled by the agriculture sector’s revival on the heels of an excellent monsoon in 2013, a pick-up in the GDP’s growth by the third quarter of 2014 is definitely on the cards. The multiple measures taken by the central and state governments as well as the RBI to contain inflation will further improve market sentiments, Ahuja says.
As the global economy has started looking up, foreign investors are also returning to the market. Anuj Puri, chairman and country head of Jones Lang LaSalle India, says that despite the challenges, foreign investors remain interested in India because the fundamental growth story remains intact. He said recent investment from major international funds strengthens that hope.
US group Blackstone has invested $1.7billion in equity capital in India in recent years. Canada Pension Plan Investment Board (CPPIB), the $181 billion Canadian pension fund, announced its first venture into Indian real estate in December, describing it as a “key growth market”, Puri says.
CPPIB committed $200 million to an office joint investment. However, it is still to be seen whether others will follow suit.
Puri also has America in his sights due to one simple fact: every year, since 2005, American companies have leased more real estate space in India than domestic companies. Outsourcing has fuelled that trend and Puri is keen to get a sense of the strength of the US economic recovery and whether it will drive new demand in India.
“One of our major US clients called me last week to say they were doubling the number of new jobs in India to more than 25,000 off the back of new business coming their way in the United States,” Puri said. In the backdrop of these indicators, experts say that the reseal estate sector is likely see a good recovery in 2014-15.
http://content.magicbricks.com/industry-news/india-realty-sector-will-be-back-on-track-soon/63564.html
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