Why Indian Real Estate Remains 'Hot Property' For Foreign Investors
While the impact of Prime Minister Narendra Modi's demonetisation move remains the central theme of all the debates happening in India at present, the country is gaining prominence to be the top investment bet for investors this year. Despite fears of an economic slowdown looming in the aftermath of the ban on currency notes of high denominations announced on November 8 last year, “all things Indian are popular” among investors, says a Bloomberg report.
"Given the possibility of a protectionist turn from the US under Donald Trump this year, the South Asian nation's assets are looking increasingly attractive. Prime Minister Narendra Modi's November decision to withdraw the high-denomination bills may see a slowdown, and prompt more interest-rate cuts, which will be good for bonds,” says the report.
It is worth mentioning here that after the existing currency notes on Rs 500 and Rs 1,000 were scrapped, ratings agencies, international and domestic both, lowered their growth projects for India.
“Due to the demonetisation, Indian consumers have not had the cash needed to complete purchases ... Time spent queueing in banks is also likely to have affected general productivity. The impact on gross domestic product growth will increase the longer the disruption continues,” rating agency Fitch said while revising India's growth projection for 2017-18 to 7.7 per cent from the earlier 8 per cent.
However, India and its real estate market would remain a dazzling spot for investors, especially those looking to park their money in real estate. Why so?
The image makeover
Despite the brickbats, the Modi government received over the note ban, the demonetisation move is seen as a positive step by the world. The US described the step as “important and necessary to curb illicit cash and actions”. India's real estate market that kept foreign investors apprehensive owning to the shady nature of transactions will now find more takers. Without undermining the challenges in the way, it is safe to say that this has come as an opportunity for India's real estate to rebrand itself to the foreign investors. The green shoots of positive global sentiments are being witnessed already.
Too grand to ignore
The large-scale infrastructure projects – this includes the Smart City Mission and various Metro projects, etc.– announced by the Modi government are too great an opportunity for foreign investors to miss. The year 2017 would be the year when the Centre would step up the implementation of these programmes. While it's hard to say in which direction the domestic demand for real estate and other Indian assets may go, it is highly likely that global investors' interest in India is only going to increase.