Challenges of Economic Recession and Investment Scenario in Real Estate Sector of India
15 Pages Posted: 20 Mar 2013 Last revised: 19 Sep 2015
Date Written: March 20, 2013
The Indian real estate sector has been witnessing golden era with property boom spreading in all directions and it is touching new heights. The Industry experts felt that Indian real estate has huge demand and potential in almost every sector especially commercial, residential, and retail. However, Indian real estate could not remain unaffected from the impacts and implications of global recession. The Global Credit Crisis which began from the U.S. Housing Finance Sector like a small fire in 2007 converted into a forest fire which engulfed first U.S, then the Western Countries and eventually the rest of the world including India.
The crisis is clearly the deepest one and the most widespread economic meltdown that the world has ever witnessed since the Great Depression. The Indian Real Estate Sector started experiencing its real impact from the last quarter of 2008. The real estate business has seen 62% decline in revenues, 58 percent decline in PBDIT and 78 percent decline in net profit between March 2008 and March 2009. This decline has been accompanied by a significant fall in the property prices in India. This is also evident from the fall in demand of all types of property and, marked decline in construction activities. It was believed that Asian economies like China and India would not only remain insulated but also play a major role in moderating the global slowdown. However, the 'decoupling theory' has proved wrong. The world-wide economic slowdown has definitely impacting the real estate sector - both across the world and India as well.
This paper makes a modest attempt to see how adverse expectations are playing a role in the Real Estate Sector of India and to find out the possible solutions to overcome this situation.
Keywords: real estate, property, investment cycle, scenario planning
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