Track2Realty: Amidst a global economic slowdown as a consequence of the US fiscal cliff and Eurozone debt crisis, India’s growth forecasts too have been revised downward over the last three quarters of the year. Even in 2013, it is unlikely that we will see a spurt in growth given the existing inflationary pressures and large fiscal deficit which could adversely impact the scope for policy stimulus in the country.
Specifically in the real estate sector, despite the opportunities, the prevailing global and local market conditions have affected investor sentiment.
Given the overall economic climate, coupled with the increased incidence of property prices, high interest rates and low sales, along with dismal corporate earnings growth, weak employment scenario in the sector and fluctuating rupee value are keeping investors at bay.
Additionally, India hasn’t really delivered since 2005 on the promise that it held as an investment destination. With exits difficult and returns less than half of those initially promised, international investors seem to be staying clear of property markets in the country.
Consumer sentiment has also ‘taken a beating’ with interest rates rising and the cost of home loans becoming dearer, coupled with continued price escalations. Even the festive season was unable to boost buyer sentiment, considering offers put forth by developers were not considered viable by buyers, who had put their purchase decisions on hold earlier.
Consequently, oversupply has set into the residential market in areas such as Mumbai and Delhi NCR, where prices have once again exceeded their peaks. While, markets in the South seem to be relatively stable. Also, it is the mid and affordable housing segments that are impacted more while the luxury segment remains fairly stable.
