Mumbai home sales expected to double

Photo: A Kap

While the country was mired in uncertainty in the run-up to and surrounding the election, the stable government is boosting confidence in the country's economy and its real estate market, thanks to a range of incentives announced for housing.

Now, sales in India's main cities are forecast by Knight Frank to grow by one quarter between now and the end of 2014 compared to the same period in 2014 - and by almost one half (49 per cent) in Mumbai.

"A country’s economic performance has direct repercussions on how its real estate market behaves," comments Shishir Baijal, Chairman & Managing Director of Knight Frank India. "This is especially true for the residential property segment. More prosperity resonates higher financial confidence among home buyers, and this leads to a greater demand for homes."

Over the last two years, as India has battled various economic issues such as rising fiscal deficit, a falling rupee and increasing food inflation, sales have already dwindled across major cities.

There was a sudden drop in new launches and absorption from the second half of 2013 onwards. Factors like rising interest rates by banks, high inflation and the weak rupee, among others, contributed towards building a negative sentiment among home buyers resulting in a substantial drop in investor interest.

Now, though, Mr. Baijal says that a turnaround is on the cards: "The incentives announced for the housing sector in the Union Budget and all the subsequent decisions taken by the new government seems to be reflecting their intention towards getting the economy back on the growth path.

"Sentiments of homebuyers too, seem to have changed for the better as the gap between demand and supply has been narrowing gradually over the last year, and this trend is expected to continue in the next six months on the back of a strong recovery in sales volume."