Hope swells in Sector

Real estate investment forecast indicates improvement due to government stimulus.

The fundamentals are in place for the global economy to move ahead in 2015.

Experts are of the view that the signs for market recover are clear and present.

“I anticipate better news ahead for India’s realty sector, which, however, will take time to recover,“ Anshuman Magazine, CMD (South Asia) of CB Richard Ellis (CBRE), says.

Magazine tots up the factors most likely to impact the real estate market positively: stronger and sustained GDP growth; more relevant reforms like the recent amendments to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013; and the paring of interest rates.

The outlook for capital markets in the sector continues to look affirmative and transaction activity is expected to improve in forth coming quarters. With the government’s reform agenda beginning to build momentum, Magazine expects India to start 2015 on a brighter note than it did the previous year.

In line with the expectations of a gradual market recovery in 2014, the economy, Magazine said, bounced back with growth rates above 5%. By the end of the year, inflation too fell to multi-year lows. Consequently, there is optimism in the market about a stronger economy, and expectations of the government ushering in reforms.

This year’s real estate investment forecast also indicates an improvement due to government stimulus efforts. Institutional investments and capital market transactions in the realty market during the year stood at approximately $5 billion. Of this, land and development stage transactions attracted the highest investments from domestic as well as foreign entities, indicating significant investment in greenfield and brownfield development, Magazine said.

Anuj Puri, chairman and country head of a Jones Lang LaSalle (JLL) India, says that with the improvement in the business environment in the country, MNCs that were hesitant to enter the Indian market because of uninspiring political environment earlier are now dusting off their plans for India and getting their entry vehicles back in gear.

Year 2015 will definitely be a good year for the real estate sector on three counts: The threat of inflation has completely submerged, and borrowing rates are sure to go down from the current levels. Economic activity is picking up, and the RBI anticipates GDP growth to reach 6.5% yy in 2015-16. Corporate India will be hiring big to help cope with rising business activity. Market re-orienting with developers now largely focusing on affordable homes, which will bridge demand-supply gap.

Real Vibes:
MNCs that were hesitant to enter the Indian market because of uninspiring political environment earlier are now dusting off their plans for India and getting their entry vehicles back in gear.

Source: Times Property, Jan 10, 2015

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