India's real estate sector is one of the major contributors to the Indian economy, with a market that is worth nearly $200 billion.
The country has seen a rapid growth in its real estate industry over the last few years, and there has been a spike in demand for residential properties across the country. One of the main reasons for this spike in demand is an increasing number of people getting employed.
Consequently, there has been a significant surge in investments from various sectors into this industry.
In this article, we will take a look at how India's real estate sector has been performing from 1979 to 2015, and how it will continue to perform going forward.
A brief history of real estate in India
India is one of the most populous countries in the world. With a population of 1.3 billion people, India has a huge need for housing. Real estate in India is an important industry, with growth opportunities in both residential and commercial real estate.
The history of real estate in India goes back to colonial times when entrepreneurs began developing urban areas with residential properties in Kolkata and Mumbai. These urban centers are known as two of the fastest-growing metropolitan cities in the world, driving growth in both industries.
The market saw its first major boom during the 1980s when infrastructure development caused prices across all sectors to skyrocket. Real estate prices reached an all-time high at this point, which is believed to be due to speculation on future returns rather than current profits.
This rapid increase led to a bubble that burst during 1992's economic crisis, causing prices to fall by 60 percent before stabilizing again around 1997. The financial crisis paved the way for developers to begin focusing on creating affordable housing units for middle class Indians instead of luxury apartments for upper class citizens, who were severely affected by India's economic troubles at this time.
Existing property values have increased steadily over the past decade thanks to new legislation and promising economic growth forecasts under
Current Market
The Indian market is healing from a long bear run. The Nifty, which had hit an all-time high of 10,000 in 2007, now trades at around 8,500. There are many factors at play here.
The first factor is the global scenario. With the US Fed expected to hike rates in December and amid signs of strengthening economy, the rupee is likely to come under pressure as it may be seen as overpriced vis-à-vis other currencies. Secondly, demonetisation has not helped - the liquidity squeeze has made things worse for companies that have seen their inventories pile up.
Thirdly, there are concerns about GST implementation - with tax credit guarantees (TCGs) still not issued to businesses and with ambiguity on tax rates for services like telecoms and digital payments, companies are wary of making investment decisions.
Lastly, there's India's own story.
India's GDP growth is slowing down; inflation is coming down; private investments are low (despite government initiatives); banks are saddled with bad loans; and rural demand continues to remain subdued.
What does the future hold for Indian real estate?
The Indian real estate industry has seen unprecedented growth in the past few years. Indian metro cities, like Delhi and Mumbai, are economic powerhouses with massive populations which need housing.
However, the recent demonetization effort by Prime Minister Modi has slowed down the growth of this industry. The sudden withdrawal of high denomination currencies has caused investors to hold off their investments in real estate.
Investors are waiting for more information on what this means for them before investing. This uncertainty is causing many people to pull out of the market even though it's far too early to tell how long-term effects will play out.
This uncertainty may be good news for buyers though, as homes will likely become more affordable (at least initially). If you're looking to invest in property or are wondering when its time to buy, now might be a good time to take advantage of this period of lower prices while you can!
Conclusion
India's real estate stocks have been doing well for the last few months.
The BSE Sensex, which is a stock index of India's top 30 companies based on market capitalization, has shown a growth of more than 4% in the last two months. This has been attributed to a change in government policies and a global economic outlook that is relatively stable.
In this post, we'll walk you through how to invest in real estate stocks in India. Keep reading to learn more!
Please do not enter any spam link in the comment box.