The re-election of Narendra Modi’s government earlier this year was an important step, showing Indians back his economic reforms. These have not been easy to implement, not least because it will take time for their positive effects to show.

The Real Estate (Regulation and Development) Act 2016 introduced important consumer protection measures, but ones which required the industry to adapt and improve. The introduction of a goods and services tax has made it possible to create efficient national distribution networks, but this also takes time.

This year saw the launch of India’s first real estate investment trust, Embassy Office REIT, which has been a notable success. However, a large and liquid REIT market – so important for real estate – cannot develop overnight.

In the meantime, India has been hit by a slowing global economy and a slump in a number of important sectors, including car manufacturing. GDP growth fell to 5% in the first quarter of FY 2019-20, with a deceleration in consumption growth.

However, the government has not stood still and has introduced further measures to support the economy, consumers and therefore the real estate industry.

The Reserve Bank of India has introduced measures forcing lenders to pass on the effects of cuts in interest rates, which ought to make life easier for buyers of homes. Also, measures have been introduced to provide liquidity support for the non-bank finance and housing finance sectors, which will boost the residential property sector.

Recent measures also include a relaxation of rules for foreign direct investment in single-brand real estate. This is good news for major brands such as Apple, which are now also able to launch online sales without first setting up physical stores. These measures will aid both the retail and logistics sectors.

These measures will help boost real estate and the wider economy in the short term, although India cannot be totally immune to the travails of the global economy.

Nonetheless, the underlying positive fundamentals for India – its young, educated and dynamic population as well as continued urbanisation – have not changed. Regulatory support from a business-friendly government will help India ride out tough times.

Further reading:
Savills India