2021 Real Estate Demand in India is anticipated to reach US$ 180 billion by 2021, according to the Indian Brand and Equity Foundation.
In the sphere of property development, there is a mad rat race of competition among the real estate players. Each one is trying to be the trailblazer so that the others can follow suit.
Yet, according to the Indian Brand and Equity Foundation, the housing sector will contribute 5-6 per cent to the country’s Gross Domestic Product (GDP).
With the liberalization of the economy, the real estate demand in India has increased by notches due to increased business prospects and labour migration for the housing and commercial segment.
8 Reasons for Real Estate Demand in India
Currently, real estate is playing a vital role in pushing the country’s GDP. Its growth is connected to improved hospitality, entertainment, financial services, and information technology (IT).
The analysts, real estate developers in Bangalore and other real estate players in India expect housing prices to go up by notches in the coming days.
One of the reasons for a rise in property prices includes popular educational institutions in India, attracting truck-loads of students across the country.
As a result, it has led to a high demand for rental accommodation and hostels. By cashing on this opportunity, they have been constructing residential projects in the city.
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#1. Increasing afford-ability of consumers
Over the past decade, the standard of living and consumers’ net income has risen exponentially. The entry of foreign companies has created several jobs.
As a result, the demand for housing and commercial properties has increased considerably. Although, in rural areas, the standard of living has remained the same.
#2. Economic growth
The high economic growth of India under the present government has led to a real estate boom in India.
In addition, there has been extensive infrastructure development as the government has allowed 100% foreign direct investment.
That said, macroeconomic factors have created growth in the real estate industry of India.
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#3. Government policies
Subsidies and government policies affect the real estate sector. The government can create demand in real estate by offering deductions, tax credits and subsidies.
With this, the investor can understand the changes in demand and supply and simultaneously notice developments.
Many factors play a crucial role in influencing the real estate market. To assess a potential investment, investors need to understand the nitty-gritty of the real estate market.
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#4. Interest Rates
The ability to buy new homes depends upon the interest rates. A meagre change in interest rate can impact the buyer’s ability to buy new homes.
As interest rates plunge, borrowing costs decline, creating good demand for real estate. Whereas when interest rates increase, there is less demand in the market.
#5. Consumer’s vigour to invest
The consumer’s confidence plays a major role in understanding the real estate demand. If consumers are risk-averse by investing in a property, they have confidence in the real estate market.
For instance, when the interest rates on home loans are reduced, consumers express assurance in real estate. This leads to a spike in real estate demand.
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#6. Connectivity
The surrounding area near the apartment creates real estate demand in a particular locality or neighbourhood.
For example, the railways, airports and prime locations such as hospitals, malls and schools are the issues that influence real estate prices.
#7. Consider this
Over the past year, the hinterland of Kandivali had a stable real estate demand, but now there has been a spike in real estate prices due to a new metro station. The surroundings can have an impact on real estate prices.
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#8. Stock Market
The country’s stock market has a substantial influence on its real estate. This is because they majorly work on credit. Therefore, if the stock markets are bullish, real estate is considered a lucrative option.
At the same time, the bullish markets result in lower interest rates due to a robust economic outlook. However, during the 2008 recession, when the stock markets took a beating, real estate took a hit.
All said and done, the real estate developers in Bangalore and other players from the cities will expect the government to improve the business climate so that buyers will have the confidence to invest in homes!
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