Stable government turns sentiments positive, impact on realty yet to be visible

The functioning of a stable government at the Centre, announcement of favorable real estate policies and opening up of new financing channels have definitely set a positive mood in the market. This is clearly evident from the upgradation of ‘Standard & Poors’ rating on the outlook for India to ‘stable’ from ‘negative’ and increase the inflow of foreign funds into the Indian economy. However, experts believe it will take some more time to turn around the real estate market.

Planning on an investment? Check out your options in Delhi!

Speaking of the change in the funding pattern in the Indian Real Estate Industry after Modi’s government, Om Chaudhary, CEO, FIRE Capital says “We don’t see much change in the pattern of funding in the Indian real estate market until the anticipated reforms are implemented. Definitely, there seems to be an upward trend as far as volume is concerned. As per the Wall Street Journal report and data from Cushman & Wakefield, private equity and other investors have put $675 million into the Indian real estate in the first half of this year. This is more than double the investments made during the first half of 2013, and is the most investment in the first half of a year since 2009.”

Know your investment better with ‘Property Advice’

The Indian real estate sector is poised for a turnaround and the new government is expected to undertake several reforms that will affect the economy and the real estate market in particular.

Khushru Jijina, MD, Piramal Fund Management sees improvement in sentiments given the stable government and a general increase in capital being deployed into the sector. He says, “Real estate is a lagging indicator in most instances and reflects both sentiments and liquidity. This will eventually translate into a price uptake as well as increased velocity for direct end user transactions but we feel that will be somewhat time deferred.”

Chaudhary adds that the recently finalised guidelines for setting up and regulation of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) are expected to provide a new source of funding to the cash crunched and debt laden developers.

Recently, with some changes in the policies on Sovereign Funds done by the Narendra Modi government, there is an increased interest in the Indian real estate market. “Typically, Sovereign Funds have long term objectives and they focus on relatively safe investments with good and stable yields. Income generating, commercial investments with good returns in the long run are ideal for Sovereign Funds. Their growing interest in the Indian real estate market is expected to ease the liquidity crunch in the commercial segment,” says Chaudhary.

Whilst there is a definite increase in the general availability of capital, there are still plenty of opportunities for funds deployment. Therefore, they don’t think that the imbalance has completely reversed yet. This shows the sector requires further opening up of new financing channels and timely implementation of announced policies to create a sound Indian real estate sector.

Source: http://content.magicbricks.com/industry-news/stable-government-turns-sentiments-positive-impact-on-realty-yet-to-be-visible/76943.html