Amidst a global economic slowdown as a consequence of the US fiscal cliff and Eurozone debt crisis, India’s growth forecasts too have been revised downward over the last three quarters of the year. Even in 2013, it is unlikely that we will see a spurt in growth given the existing inflationary pressures and large fiscal deficit which could adversely impact the scope for policy stimulus in the country. Specifically in the real estate sector, despite the opportunities, the prevailing global and local market conditions have affected investor sentiment, experts feel.
Given the overall economic climate, coupled with the increased incidence of property prices, high interest rates and low sales, along with dismal corporate earnings growth, weak employment scenario in the sector and fluctuating rupee value are keeping investors at bay. Additionally, India hasn't really delivered since 2005 on the promise that it held as an investment destination. With exits difficult and returns less than half of those initially promised, international investors seem to be staying clear of property markets in the country.
According to Sachin Sandhir, Managing Director, RICS South Asia, “Across micro-markets, investor sentiment has been impacted due to inflationary pressures and rising interest rates through the course of 2012, which have only come down marginally with a few policy revisions by the apex bank in the second half of the year. Slower GDP growth rate projections; shortage to the tune of 85% in real estate and construction professionals available today, as highlighted by a recent RICS research and high debt burden of real estate developers have also impacted investor confidence in the residential sector.”
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