India Real Estate Report Q4 2014 - New Market Report

From: Fast Market Research, Inc.
Published: Fri Sep 19 2014

The considerable potential of India's commercial real estate sector is being undermined by a weak macroeconomic climate with manufacturing activity and consumer spending growth at multi-year lows. This uncertain backdrop has led demand to stagnate in some areas of the country, leading to oversupply and fluctuation in rental rates. India has nevertheless maintained its a ppeal as an affordable (and hence attractive) market for international real estate investment.

The election of Narendra Modi's Bharatiya Janata Party comes at a time of considerable flux for the Indian economy, which grew at its slowest rate for more than a decade in 2013 as both businesses and consumers cut back on spending and investment in the run-up to the May election. This sluggish growth trend has continued into 2014 with the commercial real estate market starting to feel the effects of weak demand across much of the market as businesses remain cautious and hold back on extending their premises.

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The arrival of this uncertain climate comes as a stark contrast to the frenetic growth enjoyed by India's commercial real estate sector over the past few years as the rapid expansion of the country's services sector and a boom in middle class incomes drove demand for office and retail space. The biggest growth was seen in new tech cities such as Bangalore and Hyderabad, where rental rates have consistently grown at double-digit rates over the past few years as businesses jostle for space in an increasingly crowded rental market.

While H2 2014 will see a continued cooling in demand across much of the commercial property sector, the downturn is likely to be mild by international standards with Mumbai the only city for which we are forecasting a significant contraction in rental rates. BMI shares the consensus opinion that both economic performance and aggregate demand will start to pick up from 2015 as investors begin to return to an Indian market which continues to display solid...

The India Real Estate Report features Business Monitor International (BMI)'s market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.

BMI's India Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in India.

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