Modi or no Modi, real estate 
will boom

Indian real estate business that remained steady during the pre-election period will keep an upward trend in the rest of 2014 irrespective of polls results due this week, according to experts.

Industry players recorded good sales deals and noted a slew of projects launch this year as investors and buyers, especially non-resident Indians (NRIs) based in the Gulf region, are confident of upward momentum in the property sector and expect a stable government in the country. They said sentiments on residential segment growth are positive and the projects in main cities, which offer better affordability and returns on investment, will be picked up by domestic and international investors as soon the new regime comes into power by early next month.

“In Mumbai, we saw some pre-launch projects by major developers like Godrej, L&T, Lodha, among others. Same was the case in NCR and Bangalore. Few states like Andhara — now telangana and Seemandhra — were a bit quiet, but overall fourth quarter of 2013-14 was good compared to the scenario during previous elections,” Sunil Jaiswal, chief executive of Sumansa Exhibitions, told Khaleej Times.

According to leading real estate advisory firm Jones Lang LaSalle India, residential properties are expected to record up to 12 per cent increase in prices this year after a lackluster performance in 2013. In its recent report, the property consultant specialist noted 10 per cent year-on-year increase in weighted average prices of homes across the country during the first three quarters of 2013 as sustained weakness in the rupee, increasing inflation and high borrowing costs weighed on the real estate business last year.

Indrani Shekar, general manager (Dubai Branch) at Brigade Group, said the fourth-quarter performance was certainly encouraging in pre-poll election activity across the country.

“We are confident that the coming financial year will see an even stronger performance,” she said.

Jaiswal, who is also organiser of the Indian Property Show, said more property buyers are likely to put their investment in residential segment in the post-election period or the second half of 2014.

“Around May 16, hopefully the results will be out and indicate that who are coming in power, although the priority of the new government would be to first fulfill the commitments made to public and focus primarily will be on implementing JanLokpal, and other pending bills. The real estate sector will see all pending approvals moving faster and more investors will be inclined towards property buying,” he said. About the outlook for property business in case BJP wins polls, he said real estate sector will remain unfazed from the election results and continue its steady growth in line with market’s trend and demand for quality residential units.

“If the Bharatiya Janata Party (BJP) wins and Narendra Modi becomes the Prime Minister, the stock markets in India will see a short-term boom, but if the BJP fails to form the government you will see 10 per cent to 12 per cent correction in the markets. However, the real estate sector will not be effected by whatsoever is the results. Except that if they win Ahmedabad, Baroda, Surat and Rajkot are expected to get more favours from the central government.”

Shekar echoed the similar views and said property business in India is bound to get a boost if a stable government comes into power as widely expected by different stakeholders of the economy.

“We expect that there will be appreciable increase in price per square feet and we do recommend that prospective customers book their dream home before the impending price rise comes into effect, she said. “We are hopeful that elections will be the harbinger of a good and stable government, so that the business community, particularly the real estate sector, can look forward to better times in the years ahead, she added.

Property advisory firm JLL India said investors, who are sidelined at the moment, are likely to become active after the elections. “The increase in absorption of residential units will help reduce the currently large inventory holdings of developers,” it said.

Jaiswal, who was busy in finalising arrangements for forthcoming three-day property show in Dubai from June 12, gave his cautious advice to NRIs willing to invest in Indian property sector to take this vital decision after thorough examination of all key aspects of the projects, financing plans and return on their investment.

“Invest within your budget, seek advice from experts, invest in good brand and good locations, invest in soft launch and look for long-term returns,” he said.

Shekar also suggested an appropriate strategy to NRIs to maximise their gains by investing in property sector and said investors should put more focus on locations to ensure better returns.

“Consider investing in different locations even if it is in the same city, as this is likely to yield better returns. Look for upcoming locations which can give you property at a competitive price, while at the same time gives you good appreciation over a period of four to five years,” she said.

Another property developer said there is a high demand for ready-to-move-in residential properties in all major cities of India, however the mid-end and affordable housing segments will drive the growth in the sector.

“The projects, which are about to complete and ready to deliver, will definitely see a price increase in line with market trend. However, the major sales activity is expected to be seen in mid-end and affordable housing segments of the sector,” he said. To a question about the challenges seen ahead in the wake of strengthening rupee and stability on political and economic front, Jaiswal said the Indian unit is likely to remain stable in coming months.

“Since the beginning of this year, the rupee has gained 1.84 per cent, while foreign institutional investors (FIIs) have bought shares worth $4.87 billion during the period from local equity markets. If the right signals are sent to the large corporations, especially oil companies will bring in more dollar to the market which will eventually see the rupee gaining in coming days,” he said.

Shekar said appreciation of the rupee in India is surely a challenge, but increased demand will balance it.

Mr Edward, a Dubai-based NRI, said he is planning to invest in the affordable housing units in Mumbai in next couple of months as the property prices start moving up.

“I will be going on vacations this summer and may invest in couple of housing units in Mumbai. I expect good returns over a period of time due to positive realty outlook and stable government in power for next five years,” he said.

— muzaffarrizvi@khaleejtimes.com