Indian Real Estate Market- Heading towards a Probable Slowdown

Is the Indian real estate market heading toeards a slowdown? Seeing
the momentary uncertain economic scenario, slowdown in export-driven
industries, high interest rates and lacklustre credit growth in the
real estate markets definitely raise a question.

Real estate development in India has been highly uneven. The nascent
growth in our realty market, aided by copious flows of private equity,
is helping the real estate development process get organised with increasing
corporate and institutional participation.

These developments, coupled with healthy economic growth indicators
and a new-found comfort in this sector triggered a lot of activity and
capital appreciation in the sector over the past few years. While the
overall activity in the market remains healthy, the past 12-18 months
have seen some degree of rationalisation in residential prices.

Even though this might be a result of increased interest rates, decreased
holding power of speculative investors and sudden flush of supply in
some suburban areas, there is probably a case to admit that if not a
slowdown, the marginal rate of growth certainly seems to have come down
significantly as compared to the past few years.

Despite all this, the commercial and retail sectors continue to demonstrate
record absorption and bullish price movement. One may however argue
that significant supply on account of SEZs and other new projects may
bring about some due rationalisation in prices in these sectors over
the next few years.

If at all there is a slowdown, it will be a mild one given the demand
indicators across sectors and the attractiveness of India as an investment
destination. Also, a slowdown will be the best thing to happen for the
long-term potential and growth of this market.

Photo: Aerial view of Bangalore in 2011 (5) by Vinu Thomas from Bangalore, India, licensed under CC BY-SA 2.0, via Wikimedia Commons.