While 2014 witnessed steady growth for Indian realty sectors, the year 2015 is rife with speculation â€“ will it see positive turnaround in 2015? Will the past yearâ€™s steady growth continue in the same wavelength in 2015, too? Most importantly, what is the prospectus of Indian real estate in the current year? Will it face BOOM or go downward slope?
Indian Realty 2014: In Retrospect
The year 2014 influenced business sentiments given the price escalation in commercial properties and upsurge in the demand of residential buildings. The same year witnessed the declaration of various policies and amendments by Centre government aiming to reinforce the realty sectors (though they will be in effect only in 2015).
For starters, the government announced amendment to the ordinance of land acquisition laws aiming to simplify the same to facilitate land acquisition procedures clotted previously by consent clause. The upshot of the announcement – it will expedite construction works of various projects in future as absence of consent clause will pave fast track process for land acquisitions to complete development of projects faster. It will also materialize governmentâ€™s dream, â€œHome for all by 2022â€ together with facilitating the growth for realty expansion in 2015.
In addition, the year 2014 also witnessed multinational companies foraying into Indian realty sectors â€“ something quite very inspiring and motivational to empower the growth of the sectors. Also, if the reports from recruitment agencies are to be believed, year 2015 will witness creation of multiple jobs in diverse IT/ITeS, manufacturing and service sectors, which will apparently spell the leapfrog into the wider expansion of Indian realty in 2015.
Indian Realty 2015: Turnaround Possibility
The formation of Modi-led government in 2014 and subsequent announcement of reformative policies and measures that it made months later infused the realty sectors with feel good factors.
For instance, government brought-in measures in the context of RBI-declared incentives dedicated to infrastructure financing, interest rate cut on housing finance and announcement of REITs (The Real Estate Investment Trusts) awaiting clarity by the government before the declaration of the Union Budget 2015.
Further, the government also announced measure to standardize norms for FDI in construction fields to boost the realty sentiments and garner higher influx of the foreign funds and liquidity to India. Developers in literally â€œno-businessâ€ situation owing to liquidity issues will also see their problems reducing in 2015.
Higher interest rate procedure is obviously one of the key contributors behind tepidity of realty progress. Though, RBI Governor Raghuram Rajan turned down the request from stakeholders to normalize the stiff interest rates, given the inflation dip to a record low level in recent times, there is no denying RBI will eventually prioritize to bring down interest rates during the first quarter of 2015 to boost up realty sentiments.
Technically speaking, year 2015 will be the recovery phase for Indian realty sectors given the RBI-proposed interest cut on housing loans and other major announcements made by the government, including introduction of easy land acquisition laws will collectively boost up the Indian realty sentiments.
Also, government is reported to be keen on tackling bottlenecks in transactions and loopholes in projects which will result in positive trends for the Indian realty sectors in this year.
Factors Signaling Growth of Indian Realty Sectors In 2015
They are the following counts that will determine in what way Indian realty sectors will be influenced in 2015:
- RISE IN INFLATION, which alarmingly affects growth of realty sectors, has virtually been zeroed, signaling that current year will go easy on realty sectors. Moreover, RBI (Reserve Bank Of India) has announced interest rate cut on borrowing rates â€“ another good sign of potential growth in Indian realty sectors, as the decreased interest rate will inspire fence-sitting buyers to buy properties in anticipation of lower EMI payout. As a matter of fact, lower lending rates will produce win-win situation for both the buyers and builders e.g. builders will be able to sell out their inventory to fence-sitting buyers and the buyers will avail dream housing at a measurably lower EMI payout.
- Though it may seem to be a thin possibility of realty sectors scaling high on growth, yet it canâ€™t be denied that with Central Bank anticipating GDP growth of roughly 6.5% during FY 2015-16, realty sectors will witness desirable boom as expected from various quarters. For instance, if the expected growth is materialized, it will generate considerable degree of income growth for people.
- Corporate India has announced about the huge recruitment’s of talented workforce to deal with challenging business activities more effectively. This is also an indication of job growth -an implication of the upsurge in the income of people enabling them to afford the cost of residential buildings easily.
- The Indian realty sectors are undergoing re-orientation phase; say for instance, builders concentrate on development of low-cost housing projects for the customers coming from middle class families. However, there has also been development of luxury buildings/villas on a large scale to serve the purpose of buyers seeking a relatively more comfortable, lavish and premium dwelling place.
Key Ingredients Making Prospectus of Realty Boom in 2015 More Positive
- Survey conducted in 2012-2013 disclosed that housing industry is the second largest segment in the generation of employment in India. Moreover, real estate offers significant contribution to Indiaâ€™s capital formation and GDP share in industries like cement and brick, construction, transpiration and steel among others.
- According to the report by National Housing Bank (NHB), real estate is one of the influential factors in terms of employment generation. Also, the overall contribution of realty concerning schools, townships, residential apartments, hospitals and other residential segments gain dominance over size-able fraction of Indiaâ€™s market share. Manufacturing is directly influenced by real estate, and more than 35 million workforces are employed by real estate industries.
- The new government, which registered landslide victory in Assembly Election past year to gain absolute majority of governance, made realty market visibly enthusiastic. As expected, the government took proactive approach and tried to instill business confidence through announcement of various reformative policies to boost real estate progress in this year.
- Well-known agencies including World Bank, Moody and IMF foretold Indiaâ€™s GDP growth by 6.3 to 6.4%. As a result, it will prompt market sentiment edge further. Also, factors like depleting rupeeâ€™s value, improving export and flexible land acquisition laws along with proposed launch of REITs in India will surely afford elevation in the property consumption rate in 2015. It was noted that consumption rate of realty projects with right price rose up greatly. The notability of the raise is – it happened despite the economy slowdown in 2014.
At last, although the real estate sentiments in 2015 will face its typical viability, there is no denying itâ€™ll afford positive changes in light of the government-initiated measures announced, controlled inflation, stable economy, and incremental growth in job creations as predicted by experts. All we can say â€“ letâ€™s hope for the best!