“The winds of change are now blowing more perceptibly,” says Anuj Puri, the chairman and country head at JLL India, the real estate service company. “Inflation, including the house price component, has now been reduced to the lowest level in recallable history. Property buyers are back in force in most cities as inquiries have rebounded, and developers are finally reading the writing on the wall more accurately and coming in with the kind of supply that is relevant to demand.”

A stable government which swept to power last May in a landslide victory for the prime minister Narendra Modi has also given a boost to the sector by helping to improve confidence among builders and potential buyers. Government announcements, which include steps to increase affordable housing stock and attract more foreign investment, have injected the industry with “consistent doses of energy”, Mr Puri adds.

India’s wholesale price index — the country’s main gauge of inflation — was flat in November compared to a year earlier, according to government data.

“Borrowing rates are sure to go down from the current levels,” says Mr Puri. “This will encourage potential buyers planning to avail of home loans to finally take the plunge. Also, with property prices staying stable and good deals being offered by developers to clear their inventory, fence-sitting buyers will be further encouraged to press the ‘buy’ button.”

With economic activity forecast to pick up this year, this would lead to increased job creation in India, which also helps fuel home-buying, he adds.

India’s finance minister, Arun Jaitley, recently said that he expects India to achieve growth of 6 per cent to 6.5 per cent in the financial year beginning in April compared to a predicted 5.5 per cent rise in GDP in the current financial year. Before this the country had two years of economic growth below 5 per cent, representing its worst slowdown since the 1980s.

Manju Yagnik, the vice chairperson of Nahar Group, an Indian property developer based in Mumbai, says she is highly optimistic about the outlook for the property market.

“The real estate market has been undergoing phenomenal change in the recent months,” says Ms Yagnik. “With some stagnancy in the initial months of [last] year, the real estate market has gained a gradual momentum. The new government at the centre has added the required push for the market. We are very positive for the India’s property sector in the new year.”

She says that property prices are not going to fall this year, while JLL says it expects prices to remain “largely stable”.

A report by Knight Frank stated that Mumbai and Bangalore were expected to lead a recovery in sales volumes in the second half of last year. Mumbai was expected to lead in terms of price appreciation, with a predicted growth of 10 per cent in the past six months compared to the same period a year earlier.

Developers agree that things are moving in the right direction.

“The real estate industry has seen a series of good news in its favour with FDI [foreign direct investment] policy being the biggest move by the government,” says Abhishek Kapoor, a partner at Neumec Group, a developer which builds upmarket homes in Mumbai.

In October, India eased foreign investment rules for the construction sector, including halving the minimum FDI requirement for construction to US$5 million from $10m and reducing the project size demanded of overseas investors.

“There have also been certain challenges that we are optimistic will now be addressed by the newly formed government.” Mr Kapoor adds. “Deferred decision making, ambiguity in policy guidelines and filing of frivolous PILs [public interest litigations] are major concerns that once solved will make processes easier for both the government and the private sector working towards development of projects.”

Affordable housing has become an increasingly important area of focus in India, with Mr Modi stating that he wants to achieve housing for everyone in the country by 2022.

“Affordable housing has become the talk of town,” according to a recent report by CommonFloor, an Indian property website.

This has already led to developers planning more budget-friendly home projects, which are much needed in India.

The country’s property market is also becoming more appealing to non-resident Indians (NRIs), partly because of the weak Indian rupee, experts say.

“The urban population will surge in the coming years, which, coupled with growth in employment, education and health care, will push the demand for residential and commercial space,” said Sunil Jaiswal, the president of Sumansa Exhibitions, which organises the Indian Property Show in Dubai. “As such NRIs are still in a very favourable position as they can leverage the power of weak rupee to invest for better returns and go for higher-value transactions. For an NRI, Indian property is certainly more affordable now.”

Mr Modi’s government has outlined a target of developing 100 smart cities in India, and this is an area that is likely to be closely watched for progress this year.

“Smart cities is the latest buzzword that has created a wave in the country,” according to CommonFloor.

A survey it conducted showed that there was a lot of interest from potential buyers towards investing in homes in these planned cities. About 32 per cent of respondents said that upcoming smart cities would be their preferred destination for investment, while 41 per cent said they would favour tier one cities, which include Mumbai, New Delhi, and Bangalore. The the remaining 27 per cent indicated that they would have a preference for tier two cities, an example of which would be Pune.

The survey asked developers about their predictions for property prices. Fifty-four per cent said that they expected price rises in the next few months, while 29 per cent thought they would remain stagnant, and 17 per cent believed they would drop.

Another significant step taken by authorities last year was giving the go-ahead for real estate investment trusts, known as Reits.

“As we move into 2015, one of the crucial tasks for the current government will be to transform the chaotic image of Indian urbanisation,” says Shishir Baijal, the chairman and managing director of Knight Frank India. “The better way to do it will be to capitalise on the buzz around the creation of 100 new smart cities. This, coupled with Reits, has generated excitement among business leaders and we look forward to these developments to usher in the change for the real estate sector, that’s been reeling over the last few years.”

Source And Courtsey By :- http://www.thenational.ae/business/property/high-hopes-for-indias-property-market#page2