India Property Market Set for Post-Election Boost

India Property Market Set for Post-Election Boost

Residential News » Asia Pacific Residential News Edition | By Rebecca Bundhun | April 1, 2014 8:30 AM ET

Home-buyers are expected to return to India's subdued property market after the country's general elections, which start next week.
"There is a sense of hope among developers for a positive post-poll scenario," says Ramesh Nair, the chief operating officer, business, at JLL India. "While all eyes are on the general elections, the real estate sector is holding its breath for the potential optimism that is expected once the results are out. This optimism is expected to boost transactions and lift home-buyer sentiment."

India's general elections begin next Monday, running for more than a month, with results scheduled to be announced on May 16.
Demand for residential property in India has been subdued over the past year and a half amid slowing economic growth and high interest rates. More recently, buyers have been waiting on the sidelines to see the result of the elections before committing to home purchases, analysts say.
"The next government's economic and employment policies will be key drivers to growth in the real estate sector for the next five years," says Mr Nair. "2012 and 2013 were not the best years for the Indian realty market, and the slowdown impacted all asset classes, except in a few pockets. Revival is no doubt the need of the hour.
"Over the last few quarters, political uncertainty has significantly weakened buyer confidence in many regions. A decisive win for any of the alliances will uplift home-buyer sentiment and the property market will see a return of buyer demand due to the reinstatement of confidence. Post elections, if the road to recovery is unhindered, property buyers may very well re-enter the market in good numbers."
Mudassir Zaidi, the national director, residential agency, at Knight Frank India, says that if a strong, politically stable government comes into power, then the property is "expected to start galloping again". However, a weak fragmented government would cause weakness in India's property market to persist, he adds.
Hariprakash Pandey, the vice president of finance and investor relations at HDIL, a major property developer in Mumbai, forecasts that home prices will grow by 10 to 15 percent this year.
"After the general elections, activities will pick up speed and the conclusion of the election will help improve demand for housing," he says.
But Mr Nair points out that an instant surge in property prices might not necessarily occur.
"Many assume that property prices will shoot up post elections, but this expectation in unfounded - there are too many factors at play, regardless of which party wins," he says. "Election results do not make or break a market, but they do affect market sentiments to a significant degree."

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