Indian property market

In 2015, festive season or special Diwali celebration session in Mumbai comes with many surprise gifts from PM Narendra Modi as he relaxed the norms and regulations for foreign investment in Indian real estate sector. This year home buyers are discouraged by the rumors that real estate builders are unlikely to run out of money.

Since the opening of the market, government restrictions was preventing the global investors from putting their money in small and mid size construction projects, whereas; for global investors it was also tuff to make the exits of their money, but this festive season Indian government settles all restrictions with a stroke of a pen. Now global investors can invest their money even in completed commercial property projects as earlier they were not allowed to do that. After new rules some imported brands will be able to set up their own stores and in that Indian shopping malls will be proved as more valuable assets in near future. If like this PM Modi is going to respond every time after losing elections, so investors will gladly wish him more defeats.

Cash strapping Indian real estate developers aren’t complaining about the investment policies and foreign investment regulation, which announced at the evening of Tuesday. Now Indian real estate developers can redevelop small projects with more luxury and facilities at the centre of the city with foreign equity. In past due to rumors that Indian real estate builders are unlikely to run out of money, many home buyers get discouraged from investing in the market. In present, purchasers have no idea that when they will get the possession, however in top six cities there are more than 70% of unsold homes which are getting delayed by east 18 to 24 months for completion due to lack of funds, as per the reports of Rising Straits Capital Management, a private equity firm located at Singapore and has invested $1 billion in focused Indian real estate and infrastructure sector.

However; it’s clear that access to foreign money will not repair the financial foundations of builders because intolerably high cost of capital is meaningless until the domestic banking system becomes more confident about lending money to Indian builders. But it is expected that this new investment policy will at least stem further rot. Liquid, income generating real estate sector is ready to attract new foreign investment because of family offices of wealthy NRIs. However; in India US and Australian property projects are offering return of 14 to 15 per cent, but still its hard to get real estate funds in less develop Indian market at least then when annual depreciation in of rupee is about 5 to 6 per cent. It is expected that in coming year’s Indian property market will emerge as a viable asset class for global investors. Whereas; real estate investment trusts can speed up the process of construction in India.

Image Credits : DNA

Festival season is considered auspicious for real estate purchase and therefore developers gear up for boosting their sales. In a research report by JLL India, it was noted by its Chairman & Country Head Anuj Puri that traditionally real estate sales increased by up to 25-30 per cent during the festive season. However, this year it is anticipated that sales may not increase more than 15-20 per cent as the sentiment is still somewhat subdued and there is an affordability gap in larger cities.”

The real estate market, especially residential segment, has been experiencing a slowdown for last 2-3 years, leading to sluggish sales and long delays in the completion of projects.

JLL said that the property market is rich with options for prospective buyers with developers offering discounts in almost all the projects, particularly those which are ready-to-move-in. JLL also advised buyers to cautiously examine the offers and freebies to ascertain their true contribution in terms of the overall value of the property and the deal.

Puri added that buyers may perhaps consider the offers wherein stamp duty and registration fee is waved off, as this translates into an actual saving. He further stated that to improve the demand for housing, the government needs to review the taxes and duties that affect the pricing of any project. The process of granting approvals also requires swiftness to reduce the time taken from conception to actual delivery of homes.