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Expected Performance Of The Indian Real Estate Industry in 2014

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Real Estate has been one of the major influential factors for the Indian economy where economic growth is determined by its performance. The year 2013 did not bring forth much prospects for the property market and this has affected the economy also. Key statistics indicating the slow pace of economic growth in India include reduction in economic performance to 5% from 6.5% in 2004, devaluation of rupee as compared to dollar (1 USD = 68.80 INR), increased interest rates on real estate loans and property price hikes.

These turbulent outcomes may be attributed to liquidity crunch, extreme fluctuations in exchange rates, high costs of input, scarcity of required labour, in increasing inflation rates, and the collective effective of global as well as domestic economic slowdown. This will continue to cause hindrance in property purchasing decisions in 2014 until the price stabilizes for the entire industry or till the economic and financial strength of the country becomes potent enough to provide the means of accommodate the high prices. Let's take a look at the probable factors that would have an impact on the performance of the property market in India in 2014.

The Existing State of National Politics will Determine Recovery of Property Market

With general elections scheduled to be held during the month of May, the entire emphasis has been laid on the probable outcomes of the elections. The outcome will have key role in determining the performance level of the real estate industry. Once the elections are over, the ruling party that comes in power will influence the rates of interest and the applicable dynamics of the property industry. Following the completion of the elections, speculators have expressed the possibility of gradual recovery of this sector which would in most probabilities be marked by reduced interest rates on property loans and lowered price of land as well as built up residential / commercial property.

Legal Changes would help in Promoting Faster Recovery of Real Estate Sector

The New Land Acquisition Act and the Real Estate Regulatory Bill that have been introduced in 2013 will be instrumental in increasing transparency and accountability of property acquisitions in 2014. Specific measures that are aimed in enhancing the transparency index include relaxation of regulatory measures of FDI, enhanced data availability and strengthening of regulatory framework for the real estate sector. Enhanced transparency would help to make clearer purchase decisions due to accurate details available for various relevant metrics.


Increased Investments Would be the Primary Approach to Aiding Better Recovery

With increasing purchasing capabilities of the middle class, the majority of the population has exhibited a trend of purchasing residential property rather than taking it up on rent. This gradual shift in preference to residential property would most likely attract domestic as well as foreign investments but this is expected to bring about a difference towards the second half of the year. Due to increased interest in residential property, speculators as well as investors are targeting with slightly reduced interest in commercial spaces. In keeping with this inclination, it is expected in high probability that apartments could form the first choice of residential space. Such changes in real estate dynamics will encourage stability in the sector with al efforts being made to achieve equilibrium in the coming years.

Price and Property Location Would Become Influential Factors in Property Purchase Decisions

People today have become highly habitual of conveniently accessible facilities due to which they prefer residence in locations that have good connectivity with such facilities. Price is also a determining factor as the purchased property should be capable of delivering the relevant cost benefits. If the location of the property is well connected to all major facilities or has facilities in its surrounding area, then people would be more than willing to bear a higher price.

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