The Indian real estate sector has never had it so good. Indeed, the sector grew by leaps and bounds in the last few years. Billions of dollars worth of investments were pumped into the sector as investors, local as well as foreigners, chased the `Build India' story. However, of late the odds are only adding up against the sector. The mortgage crisis in the US and the subsequent global liquidity crunch, and now the growing inflationary pressure on account of the soaring food and oil prices that have pushed inflation to its highest level in a decade, combined with hardening interest rates, threaten to make the going tough for the domestic real estate sector in the days to come. Amongst the positives are the facts that India needs more cities, more power plants, bridges, flyovers, and roads, i.e., in essence, a lot of infrastructure. What is the ground reality for Indian realty?

Till a year ago, the Indian real estate sector appeared to be on a great surge. A surging domestic economy, rising disposable incomes, robust rupee, and entry of foreign property developers pushed up demand for commercial and residential properties to their record levels. All these appeared to be the kind of catalysts the country's real estate needed for long to transform itself, after being dubbed as moribund for decades and, more appropriately, ages. The entry of professionals has helped rewrite the rule of the game in the industry. But first, a year long turmoil in housing market and subsequent credit crunch in the US, and now a combination of rising inflation, stoked by higher food and oil prices, and hardening interest rates, threaten to act as a major dampener for the sector. In the wake of all these, experts now suggest that a substantial price correction may be in the offing for the sector, while many others have even gone to the extent of suggesting that maybe a slowdown is around. Against this backdrop, the billion dollar question that arises is: Are the days of heady growth over for Indian realty sector?

Over the last few years, the real estate sector has emerged as the investment hotspot for investors, domestic as well as foreign, as unprecedented rise in demand for residential and commercial space woke up the industry from its deep slumber of ages. Rising disposable incomes, a strong Indian middle-class, booming IT and ITES along with other services and manufacturing sectors, easy availability of bank loans, comparatively low rates of interest, and government's friendly policies that include tax incentives for home buyers, encouraged the demand for home ownership among people, especially, the salaried class. True to the expectations and given its rub-off effect on other construction-related industries like cement, paint, steel, etc., the real estate sector has emerged as the second largest employer after agriculture and also one of the most important components of Indian economic growth. The realty boom in recent years has spread to both urban as well as semi-urban areas, touching new heights, including residential, retail and commercial in the leading metros. The government's decision to allow FDI into the sector too has encouraged many foreign players to invest in the Indian realty market in a big way.

Analyst Magazine, Indian Realty : The New Realities, Indian Real Estate Sector, Mortgage Crisis, Indian Realty Sector, Indian Economic Growth, Growth Domestic Product, GDP, Financial Management, Indian Realty Sector, Foreign Investors, Federation of Indian Chambers of Commerce and Industry, FICCI, FDI norms, Urban Land Ceiling and Regulation Act, ULCRA.