By Dr. Sanjay Chaturvedi, LLB, PhD.
After IMF’s predicament on recession, world is estimating a big slow down of economies. No exception is India, with D-Coupling theory, India too is at risk of job losses and slow down aftermath of Coronavirus pandemic.
But silver lining and past experience of the industry is that it cannot be kept silent. The greatest contributor to GDP, Real Estate industry is consumer for almost 200 industries in India which includes but not limited to cement, steel, tiles, paints, aluminum, glass, chemicals and there are 3000 such items which real estate industry consumes. Having annual turn over of 5 lakh crore and 42% of contribution in GST collection besides highest contributor in Stamp Duty and state level taxes.
In last 40 years, first five year of the decade is always stagnation in real estate price. Say from 1981-85; 1991-95; 2001-05; 2011-15 were the years in real estate where the real estate prices were stagnated. The years 1986-87, 1996-97, 2006-07 and 2016-17 were boom period in real estate. And the years 1988-89-90, 1998-99-2000, 2008-09-10 and 2018-19 and now 2020 are under recession.
This trend has not affected by any external forces like stock market boom or crash, natural calamity, political uncertainty. Vouch for your self with such events and corelate them with trend we have discussed in above para. Say Harshad Mehta episode, fall of government at center etc.
Now what are those growth drivers which will prove our hypothesis that the prices going to go upwards till 2027?
Growing population and nucleus families size have become 4.6 according to 2011 census. This inclusive growth of population always going to make the demand very strong. For example for 3000 flats of MHADA there will be 6 lakhs applications, always.
Growing per capita income of Indians is at 10% on year on year basis. In 2018 it was GNI $2020 with growing trend of 10%. In education sector, Indian have sent more than 30 lakh students for higher studies abroad and it is growing.
India’s micro finance and banking sector is also showing a great % of increase. Now let us see when there was a huge fall in BSE and FII were withdrawing from capital market, the BSE index bounced backed and every day it was gaining 1000 plus points in lockdown days.
The gross average collection of GST is at Rs1 lakh crore every month. Which is indicating how big is the Indian bazars are and world is looking to entering the Indian markets. India attracted $49 bn FDI in 2019 in various sectors.
Yes, there will be a slow down sentiments in economy and many things depends on government policies and stimulations for various industries, but we cannot deny the trend of last 40 years in real estate in India. There is a huge demand waiting to be satisfied in affordable segment. There shall be huge demand in city centers where people wants to stay near to CBD areas. More the dearer, more enhancements in the real estate price. Experts and trend predicts that there shall be a growing trend in real estate prices in India, especially in metros, till 2027.