Indian GDP & its Impact on the Real Estate

GDP GROWTH RATE

Indian GDP’s growth rate has been estimated at over 7% for the year 2015 by IMF, much ahead of the Global GDP that has been estimated at 3.1%.  India’s GDP has been estimated at a higher value than most of the other prominent economies across the globe. The higher GDP growth rate estimation is expected to bring in a lot of positive sentiments across the various sections of the economy.

The higher GDP growth estimation will also bring a lot of positivity in the Indian Real Estate & construction sector, which constitutes near around 5-6% of the Indian GDP. Higher GDP growth will be followed by increased private participation along with further rise in the Equity Investment in the burgeoning sector.

Rise in Investment

One of the direct impact of the higher GDP projection will be rise in investment in the property market. One of the key factors that stimulate the real estate investment dynamics comprises of the overall economic sentiments. A positive sentiment stimulate towards risk free investment. Hence with an over 7 percent GDP growth rate, it is expected that there will be substantial surge in investment in the Indian property markets.

NRI Investment

A strong & positive outlook of the Indian economy will also entice more NRIs to look towards the lucrative Indian realty market. It should be noted that in the recent past, the vast NRI populace spread across North America, Middle East, Europe, Africa & much more are making investment in the Indian realty market.

Presently NRIs constitute near around 30% of the Indian property transaction. With increased GDP growth rates, it is expected that there will be further rise in NRI investment in Indian realty market.  After all it is the same sentiments that drive NRI investments, which drive the general investment sentiments- The GDP & the underlying health of the economy. The NRI investment in the Indian property market is also getting a push from the devaluating INR.

Festive Season & Heightened Vigor

In the upcoming festive season of Dussehra & Diwali the market sentiments towards property purchase is always very high pertaining to the general Indian belief of making property purchase during auspicious dates of Hindu calendar.

With the GDP growth rate being estimated at over 7%, it will add further to the vigor to the ongoing festive season thereby resulting into more number of transactions.

Long Term Impacts: More Urbanization

An increased GDP growth will have substantial impact on the long term health of the Indian Realty Industry. Higher GDP growth in the coming time will translate into increased urbanization, which will further result into more real estate & construction projects in the coming time, thereby again positively influencing the realty sector.

Increased Institutional Investment

In the recent past the overall Indian realty landscape has undergone transformation with higher activities from institutional investors. For instance, there has been a range of high profile Private Equity deals in the Indian realty market. The better GDP projections & Indian government’s easing of the FDI policy will be further help to the transformation process.