Not so much bouncing back, as never been away… Indian real estate is on the up

At last, it feels the worst is over: after two long years of COVID induced shocks, the harshest economic conditions for more than three hundred years, and an unprecedented public health programme (881 Million were vaccinated on the Subcontinent during the pandemic), Indian Real Estate now stands primed and ready for growth. And bearing in mind the severity of those disruptions (including labour shortages, supply chain disconnects and a near term liquidity crisis), that’s certainly not something to be taken for granted. In fact it’s a hallmark of the underlying strength of key sectors within India’s economy, and real estate in particular, all of which seemed to take those challenges in their stride: demonstrating a robust capacity to thrive that never, in truth, really went away.

Of course, on a purely domestic level, the sheer stringency of the lockdowns actually increased average property prices on the Subcontinent: in the teeth of the crisis, buyers sought the security, safety and stability that only a home can offer. Virtual viewings and completions increased, to help those stuck at home to make their home their castle. Long term renters became buyers, young millennials entered the market for the first time, and existing owners upgraded: safe in the knowledge that their investment was as solid as…well, as solid as bricks and mortar. And they were right… they’re still right, because real estate is the historic backbone of the Indian economy.

Current indicators continue to point to increasingly strong end user demand over the course of the coming year, underpinned by Government stimulus programmes such as the overarching Pradhan Mantri Awas Yojana initiative (PMAY: www pmay-urban.gov.in), as well as the Haryana and Kerala Board Housing Schemes.

And, of course, this year’s Union Budget had something to say about all that too, with Nirmala Sitharaman once again pulling a few plump rabbits out of the hat:

1. 8 Million new homes were completed last year under PMAY, a striking achievement in itself, but the Finance Minister announced a further Rs 480,000,000 in programme funding by the end of the year: designed to meet the sharp uptick in demand side variables (see above).
   
   
2. A further Rs 20 Million will be also made available to ensure ever closer integration of planning and infrastructure strategies (as part of the Gati Shakti Master Plan): adding 25,000 km of new roads by 2023, and if you’re thinking of buying a new home it helps to have a road to get there…so the benefits for real estate are obvious.
   
   
3. There will also be a significant ramping up in overall infrastructure budgets: generating additional employment in construction, as well as greater connectivity across the subcontinent.
   
   
4. These are real life policies designed to entrench solid and sustainable growth…so you needn’t look too hard for a bounce back: Indian Real Estate never bounced down, and it’s still on the up. 

Executive Overview

There won’t be any real estate bounce back on the Subcontinent, for the simple reason that India’s real estate markets never slumped in the first place: despite the unprecedented challenges of the COVID Pandemic, they still grew during lockdowns…and they’re set to grow further.

Invest in Red Ribbon RE RISE India Real Estate Fund

Red Ribbon RE RISE India Real Estate Fund is a multi asset class closed-end fund registered in Luxembourg offering investors the opportunity to participate in Growth and Emerging Markets and Mainstream Impact Investments, such as India, that offer returns rarely available in western markets.