Bust or the So-Called Bust in INDIAN PROPERTY MARKET??

July 19, 2007	(1 votes, average: 1 out of 5)  Loading ...
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Indian realty has been thriving with healthy returns reaching sky high over the last two years. This has been succeeded in grabbing the attention of prospective investors who made a beeline to strive for their share in the pie. After the uninterrupted boom time, the market suddenly began going down. Unrealistic and unaffordable property prices along with multiple hikes in home loan interest rates have turned the residential property dream sour.

However, much important is to learn what makes Indian property market lucrative for both domestic and international investors.

A Bullish Economy: Indian economy enjoys the status of being the world’s fourth largest economy on the basis of Purchasing Power Parity (PPP). It follows in the queue after the US, Japan, and China. Growing at the rate of 8%, its development measures are supported by a boom in services sector, with a strong revival of industries and ever – increasing demand for properties.

Increasing Per Capita Income: One of the immediate outcomes of the strong economic growth of the Indian economy is a rise in per capita income which is going high. Also, an increasing professional workforce is driving urbanization beyond the traditional metro cities.

Enviable Demographics: India has a diverse population of approximately 1.12 billion people with 75% below the age of 50 years.

All these factors are indirectly pushing the growth in real estate. For example: with the increasing urbanization, there has been a surge in demand for residential and commercial property in Indian metros. A requirement of 20 million new accommodation units, 200 million sq ft of organized retail and 50,000 new hotel rooms will lead to further growth in Indian real estate.

If such an enormous growth in there in store for the real estate sector in India, then what led experts to predict a bust of the property boom bubble. Following incidents may stand for the reasons for such widespread talks of this so-called bust:

• Union Budget.
• Release of stringent rules and tightening liquidity through a rise in home loan interest rates by the Reserve Bank of India (RBI) in an effort to control inflation.
• Farmers’ revolt against the construction of Special Economic Zones (SEZs).
• New norms by the market regulator SEBI forcing real estate to rewrite their IPO documents and disclose details of land banks and their valuations in their respective listing documents.

News Published Under:   Real Estate Trends |

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