The residential segment in the real estate sector has delivered high scale of investments. The investments are mainly appears to be from the on-going projects by reliable developers adhered to time bound completion of projects.
India’s Economic Signs
For the first quarter of financial year 2013-14, India’s GDP was 4.4 percent and the Reserve Bank of India (RBI) estimates to achieve a GDP of 5 percent by the end of Fiscal Year 2013-14. The reason behind the slow growth in the country’s GDP is regarded as the low industrial production and high interest rate situation. To control inflation by this fiscal end RBI has reduced the present credit. By the end of this fiscal year, the Wholesale price index (WPI) inflation is likely to reach 5.3 percent against the current 6.5 percent. The present quarter, the 4QFY2013-14 probably demonstrates the enhance drive in the agricultural and industrial sector. It is also expected that the general elections in May would bring some tremendous changes in Indian economy in 1HCY2014, as the post election in 2009 brought Rs.9,000 Crore (USD 1.5 billion) from which, the government used only Rs.2,100 for election purpose.
India’s Economic Signs
For the first quarter of financial year 2013-14, India’s GDP was 4.4 percent and the Reserve Bank of India (RBI) estimates to achieve a GDP of 5 percent by the end of Fiscal Year 2013-14. The reason behind the slow growth in the country’s GDP is regarded as the low industrial production and high interest rate situation. To control inflation by this fiscal end RBI has reduced the present credit. By the end of this fiscal year, the Wholesale price index (WPI) inflation is likely to reach 5.3 percent against the current 6.5 percent. The present quarter, the 4QFY2013-14 probably demonstrates the enhance drive in the agricultural and industrial sector. It is also expected that the general elections in May would bring some tremendous changes in Indian economy in 1HCY2014, as the post election in 2009 brought Rs.9,000 Crore (USD 1.5 billion) from which, the government used only Rs.2,100 for election purpose.
The Shifting Phase in PE
During the zenith of 2005-2008, the private equity players mainly focused on real estate sector and invested in the commercial office sector, but presently the asset towards the commercial office sector is down as investments are focused mostly in pre-leased assets or operational assets with robust occupancy stage.
Now, the PE players have shifted and spurred their investments towards the residential sector because of the Global Financial Crisis (GFC) as they understand that the returns are quicker in this sector.
With the urbanization and improvement in infrastructures PE players are also interested to invest in Tier II cities, earlier as they focused only in Tier-I cities.
PE players are playing safe now in order to preserve their principal assets, because of the recession period during which their investments turned into illiquid assets.
Since April 2012, roughly around USD 500 million would have been heaved from PE funds. Also, funds from autonomous firms from various deals are estimated. About 45-50 percent of the funds raised are invested till date and by 2Qof 2014, the remaining amounts are likely to be invested.
Presently, Mumbai, NCR, Pune, and Bangalore have engrossed most investments and it is determined that demand from end-users is the drive.
Modification of costs in housing sector
With more number of unsold units in the housing sector, the developers were left with no choice other than to alter the cost of the property. The price correction depends on certain factors that include the demand-level, buyers and other aspects.
In 4Q of 2012, around 80,000 new units were launched, but it reduced to 50,000 in 3Q of 2013. The average prices of newly launched units reduced by 15-25 percent.
In summary
The real estate of India is for sure undergoing its own share of mayhem, and has outcome as resilient and is developing irrespective slow growth in country’s economy. With its own ups and downs, it is anticipated that the Indian Real estate market will give its best in the coming year.
During the zenith of 2005-2008, the private equity players mainly focused on real estate sector and invested in the commercial office sector, but presently the asset towards the commercial office sector is down as investments are focused mostly in pre-leased assets or operational assets with robust occupancy stage.
Now, the PE players have shifted and spurred their investments towards the residential sector because of the Global Financial Crisis (GFC) as they understand that the returns are quicker in this sector.
With the urbanization and improvement in infrastructures PE players are also interested to invest in Tier II cities, earlier as they focused only in Tier-I cities.
PE players are playing safe now in order to preserve their principal assets, because of the recession period during which their investments turned into illiquid assets.
Since April 2012, roughly around USD 500 million would have been heaved from PE funds. Also, funds from autonomous firms from various deals are estimated. About 45-50 percent of the funds raised are invested till date and by 2Qof 2014, the remaining amounts are likely to be invested.
Presently, Mumbai, NCR, Pune, and Bangalore have engrossed most investments and it is determined that demand from end-users is the drive.
Modification of costs in housing sector
With more number of unsold units in the housing sector, the developers were left with no choice other than to alter the cost of the property. The price correction depends on certain factors that include the demand-level, buyers and other aspects.
In 4Q of 2012, around 80,000 new units were launched, but it reduced to 50,000 in 3Q of 2013. The average prices of newly launched units reduced by 15-25 percent.
In summary
The real estate of India is for sure undergoing its own share of mayhem, and has outcome as resilient and is developing irrespective slow growth in country’s economy. With its own ups and downs, it is anticipated that the Indian Real estate market will give its best in the coming year.
Very helpful.. I gone through your blog. Posting very helpful information..Good.. Keep doing..
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