It’s Modi Sarkaar – Real Estate Prices are at War!

Confused? The elections are not over yet & we have published this post already! We agree that it is only a matter of time before the title of this post becomes a reality. The title of this post sounds a little lot controversial. We would request our readers to first spare few minutes to read this post before forming any opinion.

As we had clearly mentioned in our earlier post that the real estate market is going through turmoil & one of the reasons behind that is the uncertain political scenario in India. When we tried to decipher what will happen next, we came up with the following findings:

#AbkiBaarModiSarkaar, #WeWantModi & other trends are trending high on Twitter & other social media these days. A lot of air has been created around Modi being the next Prime Minister of India & everyone (mostly) is speculating high gains & social development with a change in the governing body of India. #RealEstate is also no exception to the speculation. Analysts & specialists are betting on high gains in this sector too. This is due to positive sentiments & anticipation of new & investor-friendly Government policies.

FDI in Real Estate

With a change in the Government of India, the much talked about FDI in Real Estate will become a reality & that will give a boost the Indian Realty Sector. With the improvement in infrastructure & basic amenities due to this foreign investment, many new housing & infrastructure projects will flow in the Indian markets causing the sector to lift up.

Realty Stocks Rally

Stalkers of Stock Market must have noticed the recent surge in the otherwise failing real estate companies’ stocks. If not, just have a look at the following charts:

BSE Realty Sensex

One can easily notice the sudden increase in the realty sector of Indian markets. Reason – positive sentiments for the anticipated change in the government!

Enthusiasm amongst NRIs

As we have already communicated in our earlier post about NRIs <link>, the non-residing Indians already had an opportunity to make investments in real estate India the rising Rupee against Dollar is creating a virtual race among them to reserve a property for good investment as soon as possible.

Moreover, as is a known fact that a major chunk of NRIs belong to Gujarat State of India. With the air of Mr. Narendra Modi becoming the next Prime Minister of India, all these NRIs are extremely keen on making the investments.

Disclaimer: The above post is just a thought child of the writer & doesn’t have any political intentions. This is just an analysis of future possibilities in the real estate sector. Investors should make their calculations & analysis before going for any investments.

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Effects of General Elections, 2014 on Real Estate

As General Elections are round the corner in India, speculation market is also high about the Real Estate scenario post elections. Only time will show whether property market will experience a boom or bane or remain intact. But till then, let’s do our work, speculate based on analysis! Please note that we will not support any political party in this post, but just give our opinion on Real Estate influence.

Various Scenarios Post-Elections

There can be only following 2 scenarios after General Elections:

• Existing Government is reelected
• New Government is elected <link>

In both the scenarios there ought to be some changes in the existing market, both economic & financial. Of course the change would be more apparent changes in case the government is upturned. It is a known fact that Property market is highly affected by the health of economy & finance in the country.

Effect of Financial & Economic Market on Real Estate

Financial Market

Economic Market

This comprises of securities, stocks, trade and exchange rate markets in a country. Basically all the investments of the nation come under the financial markets. Financial Market controls the wealth of a nation and its citizens which in turn affects the investment in real estate. With a change in the politics, definitely there will be changes in the foreign investment policies of India and that will impact the way investments are made thereafter. Even if the Government remains intact, this market is in for changes. This is because; currently the policies are being formulated keeping in mind the vote-bank. Once the elections are over, policies will be reformulated and that will affect how investments are made in Real Estate.

This includes the interest rates and policies formulated by the Reserve Bank of India (equivalent to Federal Bank). The rates at which loans are disbursed come under its scope. This decides whether an individual or a group will be able to finance the investment and to what extent. A change in politics will not have any direct or visible impact on the economic markets as it is controlled by an independent body, RBI. But yes, indirectly there will be a lot of effect here as economic policies have to be synchronised with financial markets. Any non-synchronisation would lead to halted growth and inappropriate levels of inflation in the country. Real Estate will definitely get affected in this case also.

In the above discussion, we have shown that financial and economic markets will experience changes after elections, which in turn will impact the property prices. Many of you must be wondering whether this impact would be positive or negative! The answer is – “we don’t know!!” Positive or negative, high or low – everything will depend on the policies that the government forms.

One thing we can say with 100% confidence is that there will be changes in real estate scenario in India for sure and historically it has been seen that a change results in better.

So choose your votes rationally!

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