February 15, 2010 by akhilendra
Indian Economy & its impact over Reality Sector
Indian economy is going through a tough phase. Share market, industrial product and above all, our temper is down. Share market has lost 600 points in a week. Stock prices of many companies are down by 70-80 %. Economy is slowing down, though fundamentals are still very strong, but given its current face, it is definitely getting affected by global circumstances. In last decades or so, reality sector boomed like anything, sector growth was tremendous. As economy was doing well, people were making money & buying houses for personal & investment purpose.
But now things have changed. Economy has slowed down. Economy of U.S & Europe been most affected, these circumstances are beating up reality sector, as NRI’s are one of the top investor in the sector. NRI are among those investors, who buy those expensive & luxury flats. As many people are losing jobs in U.S & Europe, many of them are from India. People in India are also not very sure about their future as most of the sectors are getting affected.
Experts are expecting a double digit impact over reality sectors. Interest rates are very unpredictable. Due to recent global credit crisis, banks in India are also getting cautious. Getting a loan is not that easy now. There has been a drastic reduction in demand of high end houses. Real estate sellers are trying hard to attract buyers, offering many discounts, schemes like book now & pay later. There has been a substantial increase in input cost, which has hampered the margins. Many real estate projects have been delayed.
The main impact has been over sub-urban & rural projects.
Investors have also become extra-cautious & are focusing upon only tier-one cities rather than moving to lower tier cities. Everybody is scared of an economic recession & India cannot be completely insulated from the global financial recession. There is a liquidity crunch due to increased outflow of money. But if you see the very basic component of real estate sector, i.e. need, we can conclude that in long term, it will come out of this chaos.
Economy is bound to grow, we are a market, driven by domestic demand, which can slow down for a while, but will continue to grow. Employment is increasing, people are making more money & this will have a positive affect over real estate as house is one of the most important & basic need of a individual. PM has also given assurance of a consistent growth. Lets hope, we can get out of this hell soon, without getting hurt drastically.
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