The ‘Narendra Modi Effect’ on Real Estate Sector in India

Real Estate in India has been reeling under a severe slow down for the past 3 to 4 years.

The overall economy has seen unprecedented recovery from a 4.6% growth rate in early

2014 to 7.3% by March this year, however, real estate in India seems to be still struggling

due to huge investments which have been made coupled with slow inventory disposal.

Real Estate Sector in India reflects increased Growth Rates for 2014

As per predictions the sentiment is likely to continue all across the year, with 2016 probably

heralding the recovery cycle. However, if we go into the facts and figures which are

available, one would realise that the Real Estate Sector in India is well on a recovery track, of

course perceptible results would be seen only by 2016. As per the figures released by

Cushman and Wakefield over last 2 years, the Real estate Sector in India saw a drop of 65%

in investments in the year 2013, to only $ 1.2 billion as compared to the previous year

(2012). However, 2014 saw this figure going up to $ 5 billion, that is, a phenomenal increase

of 140% and Indian Real Estate Sector stands at number 3 as far as these figures are

concerned across the World. The overseas buyer sentiment grew by 38% and clocked $ 1.93

billion in investments and hold your breath, the domestic purchases saw a whopping 62%

growth to $ 3.12 billion! Of course, we need to look at the relative growth, that is, from

2012 to 2014 and cannot start celebrating on the year to year growth figures. Having said

that, the figures for 2014 are very encouraging, outlining a overly positive sentiment for the

coming months and are also indicative of the fact that the Real Estate sector in India is

showing signs of maturing and has shunned the tag of an unreliable investment option.

These figures have not been emphasised by the industry probably because the internal

market sentiment is still dull.

The Modi Factor, Achee Din for Indian Real Estate Industry

Maturing of the Real Estate Sector has taken place (or is still underway) because of a

number of policy based factors, which had been discussed at length in our previous blogs

(refer to “Is the Time Right to Invest in Real Estate in India?” And “2015, The Year of

Decentralisation of Real Estate in India”), however one very important aspect which has

affected this change has been the Prime Minister Shri Narendra Modi’s visit to 15 Nations in

the last 10 months. The way he has connected with the Indian diaspora across the globe and

raised the Nationalistic feel in the NRI community along with his impassioned call to fall

back and do something for the Nation, has touched the right chord and probably is the main

reason for this phenomenal 140% increased investments in Real Estate sector in India (of

course we do not have figures to prove that). Our estimates suggest that the sector will

grow by minimum 50% in 2015 on a year to year basis. So we can safely conclude that Real

Estate in India is in for Achee Din!

Visit Us - http://www.blog.propchill.com/