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Factors Affecting Real Estate Market in India.

Introduction

As one of the most recognized sector in the world real estate ranks second. It is also in the largest employer category all around the world. Every year real estate market grows by at least 30 percent. There are four main sub sectors in real estate namely, retail, hospitality, housing and commercial. Growth of corporate sector, urban and semi urban areas trigger improvement in the real estate sector. In terms of influencing the overall economy construction industry ranks first with respect to its direct and indirect effects.

It is expected to have huge NRI investments in the coming year including short term and long term investments. The most preferred location for real estate boom is Bengaluru followed by Ahmedabad and Pune.

Bengaluru has been at the top of its real estate game as of now but it is also important to note that the major cities in different states are just developing with fast pace. Naturally, demography of the country plays an important role in influencing real estate market.

Demographics:

Cities go through the shift in demographics in due course of time. This shift is very gradual but as the real estate development takes place it is apparent. Bengaluru is the best example of shifting demography. Before 15 years Bengaluru was a quiet place mostly having middle aged population. It became IT hub in the last decade and the total real estate scenario changed.

More professionals started migrating to Bengaluru which triggered a huge development in the real estate market.

 

Interest rates:

Interest rates levied by banks is one of the factors which may affect the real estate market.

If the interest rates are low, people would try and invest in real estate as the prices would appreciate in due course of time giving the best possible returns. Ultimately, every business including real estate works on the demand supply theory. If interest rates are low the demand will be high, there would be increase in sales but there would also be price increase.

Economy of the country.

GDP shows the economic health of the country. The trend in employment, increasing manufacturing activity and overall productivity will certainly affect real estate market.

When there is a good manufacturing activity, huge infrastructural development, people tend to get relocated or they try to settle themselves near their workplaces, such as manufacturing units or commercial hubs, which triggers real estate development in those areas. If there is a good connectivity between different roads, then people may consider shifting themselves from a poorly connected area to the new upcoming well connected residential area. Every small change in the economy of the country and overall sentiments affect the real estate market.

Real estate market changes as per country’s economy. There are several indicators which make the changes apparent. There is a need of real estate professionals to understand the clues.

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