In the event that the global slowdown continues as it is or worsens in 2009, the same would definitely have an adverse impact on the Indian real estate sector.
This primarily stems from the fact that a large part of the bull run in the Indian real estate market over the past three-and-a-half years or so has been fueled by foreign direct investment inflows from private equity / hedge funds/ institutional investors.
Where these sources of capital experience pressure, this could reduce investment and consequently growth in the sector.
The fate of real estate market in India in 2009 would really depend on how the global economy, and more importantly, how confidence returns.
Moderation in prices is also a key factor, says Karnik
Where these two factors show recovery then the same should definitely result in a turnaround in the Indian real estate sector.
Factors that could play a key role in reviving the markets could be lowering of interest rates and emphasis on affordable housing segment.
The recently announced government stimulus packages are definitely steps in the right direction.
Whether the same are enough or more would need to be done would really depend on the type of projects that are launched, pricing impact on current projects, keeping the stimulus measures in perspective.
Reduction in interest rates, moderation in prices depending on the specification of the project, could be some more measures that may be taken.
Gaurav Karnik is Associate Director, Real Estates Practice, Ernst & Young