Source: Bloomberg ( https://bloom.bg/45uEB8u )

India’s real estate market boom is still a few years away from peaking. But the cycle’s longevity could turn on a few factors, good and bad, say realty experts. It will hinge on not just a more widespread demand for homes and offices but also smart supply and price management by the country’s top developers.

India’s real estate market boom is still a few years away from peaking. But the cycle’s longevity could turn on a few factors, good and bad, say realty experts.

It will hinge on not just a more widespread demand for homes and offices but also smart supply and price management by the country’s top developers.

India is at 9 o’ clock on the property clock and it will take at least two to three years to reach 12 o’clock (the peak), Gulam Zia, senior executive director at property consultant Knight Frank India, said to me.

So, the party is likely to continue, although the rate of growth may slow down in time, he said.

The reasons for this upturn in realty, especially the housing sector, are regulation, consolidation and the wealth effect.

The pandemic is widely credited for having fueled the desire for larger homes. Yet its real impact was via cheaper home finance as interest rates declined as well as lower transaction taxes and charges that made a significant impact in high-value purchases.

This improved slumping real estate return ratios and encouraged Indians to channel savings (and borrowings) to homes, unleashing demand pent-up since 2018, said Zia.

Inflation-adjusted returns on real estate finally turned positive last fiscal year, a Crisil Quickonomics report showed.
Higher returns lure households to park more savings in real estate.