Harrish Kumar Jain, Brihanmumbai Developers Association

Author: Harrish Kumar Jain, Vice President, Brihanmumbai Developers Association (BDA)

China has one of the biggest real estate markets amongst all the countries. However, since the last year the real estate market of China is crashing down and China is experiencing one of the most difficult economic crises. Home sales have dropped in China considerably this year and the ongoing decline is said to be the worst in the country’s history.

An average person cannot afford to buy a house due to the shooting prices. As the regulations are tightening and due to the restrictions because of the capitals drying up, developers are in a tight spot to find buyers to fund their incomplete projects. Hence the overall scenario for the housing market in China looks bleak.

Investors in China are looking at other emerging markets such as India. This will have a positive impact on Indian real estate market and will further lead to growth. The collapse in the Chinese property market will also reduce the commodity prices which will eventually benefit India.

According to the reports, India is the second largest country for steel producing after China. So this is a great opportunity for India. The Indian real estate market has grown rapidly and has proven resilient in the last 2 years despite the global crisis.

As work from home opportunities has become a norm and with the rising income levels, the domestic demand is increasing. Also, huge investment in infrastructure and rapid urbanisation are all leading to an increase in demand for buying homes.

Post pandemic, it is observed that lot of interest has been raised in high-end and luxury properties from high net-worth individuals and especially from the Non-Resident Indians (NRI). This increase in their purchasing power is probably happened with the rupee value going down.

The real estate market in India seems confident. However, to sustain the current market, it’s crucial to find a balance between the stability and growth of a business. The Government is also taking note and started taking necessary measures.

Government’s focus on building of highways and other infrastructure is leading to urbanisation. The increase in consumer spending has created demand for both housing and commercial real estate in India. Government’ support on the affordable housing segment will boost up market sentiments and cater to growing demand of affordable homes.

This will help in improving the real estate market condition over the next years. Also, with reforms such as Real Estate Regulation Act (RERA), linkage of stamp duty with circle rates and approval of FDI in real estate via Real Estate Investment Trusts (REITs) is said to be a game changer and is expected to give a huge positive impact to the market.

Overall, Indian real estate sector appears to be on a strong foothold currently and it is unlikely that the sector is headed for a crisis. What we must take away from the Chinese crisis is that Indian developers must constantly estimate the financial risks and revise their business strategy to make it stronger with the current economy to avoid a similar situation like China well in time.