Revival is back for Indian real estate market
India’s realty sector has witnessed a revival in the last few months driven by a significant increase in the level of construction activity of low-budget housing coupled with low home loan rates.
According to Boston Analytics research firm, the country’s real estate sector has seen increased supply and pace of construction activity which caused improvement in pessimism related to real estate price. Low rates of interest on home loans driven by Government’s stimulus packages have also encouraged the Indian consumers to buy homes.
Shirin Bagga, Economist, Boston Analytics, said: “Increased supply, improvement in pessimism related to real estate prices, and low rates of interest on home loans seems to be encouraging Indian consumers to firm up their home purchase decisions”.
The research firm collected data from a monthly survey targeting 10,000 respondents cross 15 Indian cities—Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Bangalore, Ahmedabad, Chandigarh, Nagpur, Kochi, Jaipur, Lucknow, Bhubaneswar, Patna, and Vishakhapatnam.
The report said the sentiment related to pace of construction activity conveys more optimism with regards to observed change in construction activity in Tier II and Tier III cities relative to Tier I cities. “Additionally, the real estate projects which are in various stages of completion in Tier I, Tier II and Tier III cities and towns appear to be infusing optimism about the expected change in construction activity among respondents across Tiers,” the report added.
As pointed out by the Economic Survey of 2009-10, the importance of the construction and real estate sector in creation of both physical and financial assets has been growing over the years. The construction sector now accounts for 8% of GDP at constant prices, up from 7.7% in 2004-05. Similarly, the share of real estate ownership of dwelling and business services in overall GDP as increased to 9.2% in 2008-09 from 8.9% in 2004-05.