India Realty Market Update

May 2014: Real Estate Market Overview

Expectations of an economic turnaround were bellied with GDP growth slowing down to about 4.7% for FY 2013–14, marking it as the second straight year with below-5% growth. Agriculture grew at 6.3% q-o-q, while manufacturing growth dipped to a low of about 1.4% q-o-q. A persistent global economic slowdown hemmed in India’s exports sector as well, further hindering growth prospects.

A bright streak, however, was the emergence of a stable political dispensation at the center, with a propensity to welcome investments and usher in economic reforms. For the Union Budget lined up later in July, the new government is aiming at relaxing FDI guidelines, providing clarity on tax reforms, supporting industrial growth, and aiming at large scale infrastructure creation. The central bank also took cues from the altered political environment and maintained status quo in its latest monetary policy review in May, while cutting the SLR by 50 bps and releasing funds worth INR 39,000 crore into the market. It is widely expected that the new government shall soon allow the entry of REITs as investment vehicles, permit 100% FDI in e-commerce and infrastructure, while providing tax incentives to the realty sector at large. 

India Realty Market Update

April 2014: Real Estate Market Overview

As consumers continued to face inflation and high interest rates in April, average household spending seemed unlikely to recover in the near term. Subdued market sentiments looked likely to continue unless consumer confidence began to rise. With consumption accounting for a large portion of the GDP, any positive change in spending patterns could affect India’s economy for the better. The major impediment to such desirable outcomes was a consumer price inflation (CPI) of over 8%, which kept interest rates high. Consequently, sentiments in big-ticket purchases—such as housing—remained subdued. 

Investment Opportunities in the Delhi NCR

The Delhi National Capital Region (NCR) is perhaps among the most sought-after property investment destinations in the country, in terms of housing and commercial assets. The region has historically provided good returns on investment for quality projects from prominent developers, at locations with premium social and physical infrastructure.

Pune sees highest office space addition in Q4, 2013

Close to 7.3 million sq. ft. of office space supply entered the market in Q4 2013, as compared to less than 3 million sq. ft. in Q3 2013. This was led largely by a number of commercial and SEZ developments that had been delayed over the previous two quarters, and were finally completed in Q4 2013. Pune led these project completions, followed by Bangalore and Hyderabad—together contributing to about 71% of the total new supply in India’s top office markets in the last quarter of 2013.

Office space absorption in the top seven cities of the country grew by approximately 35% in Q4, 2013 vs Q3, 2013

Office space absorption in the top seven cities of the country grew by approximately 35% q-o-q—registering around 8.2 million sq. ft., as compared to around 6 million sq. ft. in the previous quarter—according to the findings of CBRE’s latest report. India Office Market View Q4 2013.