Vote on Account 2014: Indian real estate embracing change in the time of economic revival
By: Gaurav Karnik, Tax Partner - Real Estate practice, EY
The past decade has seen the Indian real estate industry ride on a roller coaster ride through many highs and lows. This period has seen the expansion fury which gripped the sector with the market peaking in 2006 -2007 characterized by a growth in demand, substantial development and increased foreign investments. By mid-2008, this fervour was replaced by cautious evaluation of business models and plans, which was the key agenda of the business houses when the market loomed large with uncertainty in 2008. The real estate industry world-wide entered 2010 with a renewed sense of optimism with economic recovery mitigating the adversities that the recession had generated.
This time-period of Indian real estate history got more exciting with the sector having already witnessed a boom to bust cycle. The optimism of 2010, seemed short-lived with things gradually moving towards uncertainty yet again. In 2013, India recorded the lowest growth since 2009, increasing concerns about the Country's economic performance. The year has seen a significant fall in the value of the currency, increased inflation, political uncertainty with impeding elections and a highly volatile stock market. The sector is currently at an inflection point in the cycle, where there has been a strong focus from the government to recognise some of the omnipresent challenges that have been plaguing the real estate industry.