Fresh from winning eight awards at the prestigious US Oscars it appears as though Slumdog Millionaire could be set to revitalise the Indian property market and breathe life into a sector which has been under severe stress over the last few months. But can the market really depend upon a movie about life in the slums of India?
The Indian property market
As we have covered in some of our recent articles, the higher end of the Indian property market has escaped relatively unscathed at the moment although this is literally the tip of the iceberg. Away from the millionaire members of society there are real concerns that the “hotspot” which was the Indian property market has been affected by a sudden desertion of buyers and the ongoing economic downturn.
Over the last few years the Indian economy has emerged as one of the potential powerhouses of the future and western companies have literally been fighting each other to gain access to the massive population of the country. While many had hoped the gap between the poor and the rich of India would have been reduced by the significant increase in economic activity this would not appear to be the case.
The award-winning movie Slumdog Millionaire has highlighted the heartbreaking life which many people are forced to endure in India where every penny counts with massive communities living literally on top of each other in what can only be described as rubbish tips. This is the hidden society of India and one which has yet to benefit substantially from the economic upturn of late.
Will we see a Slumdog Millionaire effect?
As the movie awards season reached a climax at the US Oscars it seems as though the eyes of the world are now on the Indian property market, the slums and the Indian government as a whole. While the popular western press do not appear to pay much attention to the slums of India (and other areas of the world) the award-winning movie has changed this, at least in the short term.
It may be unfortunate that the timing of the movie has come when the worldwide economy is struggling but there is a feeling it can only benefit the country in the short to medium term with a significant increase in tourist numbers expected as and when money is available. This is sure to lead to a requirement for more tourist targeted properties, an improvement in the Indian economy and the potential to increase the profile of the country around the world.
The sight of the children from the slums of India walking down the red carpet of the Oscars has touched the hearts of many with a suggestion that more pressure will be placed upon the Indian authorities to try and alleviate the poverty seen in these areas. There has been constant criticism over the years that the Indian government has focused upon the wealthier of the Indian society at the expense of those at the bottom end of the income scale, but will they dare continue this alleged policy?
Interesting developments in the Indian property market
It has been revealed over the last few days that Indian property developer Lahari is in the process of launching what they claim to be a unique “investment come vacation home opportunity” known as the Lahari Suite Homes in Hyderabad. The project will cover six acres and accommodate 737 apartments with the company promising “assured returns”.
The project itself is due for completion by March 2011 and will accommodate the more “luxurious and classy” end of the market with a swimming pool, spa, gym and luxurious gardens all included. Interestingly the company is promoting the properties with an assured monthly rental income for 15 years and a “guaranteed” buyback on each property after five years of $29,000 against a purchase price of just over $24,000.
While it is interesting to see such an ambitious development ongoing in the light of the worldwide economic downturn many investors are obviously going to have concerns about the state of the Indian property market both now and in the future but could this turn out to be a perfectly timed development?
Property ownership in India
One of the main problems with the Indian property market is the fact that as the economy continued to grow we saw more and more of the population look towards property and other traditional investments as a way to invest their savings for the future. It would appear that some people overextended themselves and have being caught out by the recent economic downturn which has hit many people hard. The property bubble has burst in the short term and despite government attempts to support the market there has been a significant downturn.
Whether the Indian population will again be as supportive of the property market as and when the economy recovers remains to be seen as many people have had their fingers burnt by this “easy way to make money”.
The Indian economy
As we touched on above, the Indian economy has grown massively over the last few years as more and more western companies look for exposure to the region. Even though the ongoing economic downturn has hit many areas of society and businesses fairly hard there is a feeling that the economy will bounce back quicker than the majority of those around the world. There is still underlying demand both domestically and from western companies looking to enter the Indian market, something which will obviously support the recovery in due course.
Conclusion
There is no doubt that Slumdog Millionaire has brought the eyes of the world onto India and the massive difference in wealth between those in the slums and those in the millionaire apartments which have sprung up around the country. It is debatable as to whether the authorities will shift their focus from the business people and wealthier of society back towards the slums but many people around the world have been shocked by the award-winning movie and the problems that many of the Indian population face on a daily basis.