The Indian real estate market was one of the better performing real estate sectors towards the end of 2014, ending the year on a high in the eyes of many experts. The beginning of 2014 was impacted by the political situation although the introduction of a government with a clear majority has given investors food for thought and the opportunity to focus on the future. There has also been an array of other developments across the Indian real estate sector which has certainly given overseas investors more confidence.
It will be interesting to see whether this optimism follows through into 2015 and whether indeed investors continue to increase their exposure to the region. Some of the factors to consider include: –
Improved tax regime
Historically there has always been demand for Indian real estate but much of this has often centred on hotspots and major cities. In recent times it has also been a relatively small number of individuals and companies who have benefited the most although the growing Indian economy is bringing more wealth to the general public. There is also a sea change with regards to property investment and property ownership which, bearing in mind the size of the population, bodes well for the future.
The tax regime has been improved and streamlined offering various incentives to overseas investors which have not been there in years gone by. Real estate investment trusts have attracted very different opinions but they have played a major role in growing investment in the Indian real estate sector, for both domestic properties and commercial. There is talk of further refining of the tax system and bringing an array of individual taxes under one umbrella. Simplification of the financials will only help those looking at property investment across India.
Corporate and domestic properties in demand
As we touched on above, there has been something of a sea change over the last few years with regards to the Indian real estate market. This has led to significant and growing demand for both corporate and domestic properties and many experts believe that the pent-up demand which we began to see released towards the end of 2014 will continue. This momentum will help the sector and create growing liquidity which is always vital to any investment market.
Growing investment attracts higher expectations
One issue which has been mentioned by various experts is the fact that some Indian property developers have historically had a record of not delivering on time and unfortunately sometimes substandard work. Now that the sector is becoming more “professional” both domestic and international investors are now demanding higher-quality work delivered on time. This will be a challenge for some Indian real estate developers but it is one they need to overcome in order to encourage and strengthen the momentum of 2014 into 2015.
All in all it seems that the Indian real estate market is well set for further growth in 2015 with the political situation now more stable, a complicated tax system currently being restructured and general improvements in the delivery and quality of real estate developments.