4 Global Factors That Can Affect Indian Realty Market

"World is One" and this phrase isn’t justified only on the humanitarian grounds, but it is also verified when it comes to business and economy. Each and every country in this world is strongly connected through their respective economy and industries that are operating. Meltdown or a recession experienced in one sends jitter to all and vice-versa. Real estate has not a very different story and therefore, negativity seen in one market can severely affect the real estate market operating in another country. India has economic relations with many different countries; major being, US, Greece, and a number of European and Arabic nations.

The 4 Great Ways

This can be easily exemplified by the famous debt crisis experienced in Greece and the ripples created due to meltdown seen in China’s market. In both the cases India was not directly related, but quakes were still felt in the economic arena and especially in industries that are soft targets; for example Real Estate. The reason being here could be the export and import relations as well as the expat movements for jobs. Both these tasks has the power to affect the economy of any country involved; directly or indirectly.

Now let us see 4 great ways through which any movement or activity in the global real estate market affects the Indian realty zone:

Price of Commodities

This point can be clearly explained through the ongoing slowdown in China’s market. Hard commodities, especially metals, have been hit hard by the slowdown seen in the country. The trading figure of Copper is indicating disappointing 6 year low. Similarly, aluminum is also trading low and that too below the cost of production of many China based companies. China is greatly hurt here as it accounts for world’s largest copper consuming country.

However, this is a good sign for the Indian infrastructure sector as the country can source metals from China at a low price. The ‘smart city’ project is anticipated to commence at a good note.

Size of a Country

The size of one country greatly affects the real estate market of any other country. One can easily understand the point with the aid of the USA’s real estate sector, which is its largest industry. Housing sector makes up a large part of US fiscal arena and housing cycles can impact other parts of the world in a great way. Specifically speaking, the most open to such changes is the property market in India. Cities like Mumbai and Delhi are closely monitoring the US economy to see what is on its way for them. The consistent rise in the US housing segment is a clear indication that other countries; especially the ones that are close knitted, may see a similar jump in their realty market too.

The Game of ‘GDP’

Real estate contributes to a major portion of any economy. One such country that depends upon its real estate for a boosted GDP is India. On the same side, it cannot ignore the economic scenario prevailing in the partner nations. For instance, if there is an economic depression or recession in a country or its realty market that has economic ties with India, then industries operating in the former will perform badly. The foreign investments, office construction or business alliances will slow down. This can severely impact the real estate in India as the commercial segment would be the entity that will be badly hit.

Oil Prices

India has a strong relation with oil producing countries, such as the Middle East nations. The current plunge in the oil prices had a deep impact on the realty market in India. The fall in the oil prices automatically depreciates entities such as costs of driving, heating a home, and similar activities. This in turn leads to confident local economies that are stationed outside the oil-producing regions. According to Trulia Chief Economist Jed Kolko, plummeting oil prices can affect the employment market as well as the global real estate market. Cheaper oil prices will definitely spark the purchasing power of people. India has a same story to share here.

The global economy has the power to affect the real estate market of a country. Since India is a developing country and is currently shining bright on the global landscape is at a greater risk or vulnerable to any changes, whatsoever.

Currently associated with 99acres.com, Tripti, strives to keep her readers updated with the upcoming global and national trends in real estate, finance and banking sector.