Real estate sector to see a turnaround in 2015

As the early days of 2015 coast along, it is clear that the Indian economy is finally turning the corner. With GDP growth pegged at 5.5% this fiscal against 4.7% in the previous financial year, reports indicate that hiring in various sectors will gather traction this year, leading to better job and income prospects for salaried employees. All this augurs well for the Indian realty industry, which was beset with muted sentiments since the feel-good factor had been missing during the past few years. The turnaround in sentiment actually began with the election of the NDA Government via a clear mandate in May 2014. Thereafter, a series of incremental reforms and announcements augmented the feel-good factor across India, which benefits Indian industry as well as the real estate sector. 

Some of these measures include the incentives announced by RBI for infrastructure financing, the reduction in interest rates on home loans, incentives for affordable housing (with Rs4,000 crore being allocated for this), announcement of a framework for REITs (Real Estate Investment Trusts) and relaxation of norms for foreign direct investment in construction. The Government’s initiative in relaxing complex FDI norms will help boost sentiment, leading to higher foreign inflows and more liquidity. Cash-strapped developers will find their liquidity problems easing in 2015. One factor consistently contributing to tepid end-user and investor interest in realty offerings has been the high interest rate regimen, which RBI Governor Raghuram Rajan steadfastly refused to lower last year, despite repeated requests from various stakeholders. But with inflation dropping to record lows in recent months, the RBI will finally take a call on reducing interest rates during the first quarter of this year. 

Read full story: Real estate sector to see a turnaround in 2015