Reasons Behind the Slowdown of Real Estate Sector in India

The real estate sector has been going through one of the toughest times in its chequered history in India for a few years now. Nothing better sums up the situation than the picture in India’s financial capital, Mumbai, which is saddled with a huge number of unfinished projects as well as unsold units, within the city and suburbs. Further, with the economy experiencing a downslide, there is acute funds crunch. Experts have termed the period between 2017 and 2019 as worrisome, a bleak period of uncertain times that shows little signs of an uptick market sentiments.

A survey by Knight Frank, Federation of Indian Chambers of Commerce and Industry, and National Real Estate Development Council, there are negative sentiments among real estate stakeholders. Another survey report by premier Real Estate firm, Liases Foras, unsold inventory units stands at a record 42 months.

Experts believe that a sustained revival in the real estate sector would in the long term largely depend on numerous factors getting resolved at a time, rather than step by step. They also feel that nothing less than a big stimulus package from the Central & State Governments would help revive the real estate sector for the long term.


A combination of factors put together has derailed the real estate sector’s growth, contributing to its present plight.

  • ECONOMIC SLOWDOWN: Indian economy like major world economies is facing a slowdown. This has put the lid on employment creation and job security in India. With the employment market dull and layoffs a nagging threat, cash-conservation has become the order of the day. People have become reluctant to invest, must less in real estate which is undergoing even more tough times.
  • NEGATIVE ROI: The past few years have seen increasing negative returns on investments in real estate constructions, especially residential. Many locations across India are witnessing this trend. Market reports reveal that ROI currently is at a mere 2-3% even in the most favorable cities across India. This, in turn, has put off investors to withholding their money in real estate.
  • DELAYED CONSTRUCTIONS: The Indian real estate market is witnessing increasing cases of delayed and terminally-stuck constructions, most of which have come to a halt. In some cases, they have led to court disputes, with cases being fought against the builders. These factors, in turn, have eroded the faith of the people in builders leading to the withholding of investment in real estate constructions.
  • Unfavorable LOAN DISBURSEMENT: RBI has issued stricter norms and guidelines to banks dispensing housing loans. Previously loans were disbursed between 80% and 90% of the property value. Currently, it has come down to 70%. This has led to investors having to pay 30% of the property cost upfront to avail of home loans. Many interested buyers do not possess that much money to invest in a real estate property. Uncertain loan disbursal with uncertain economic conditions have largely led to a fall in real estate sales.
  • ANTICIPATION OF PRICE CORRECTION: In uncertain economic conditions, interested real estate investors are in no hurry to invest their hard-earned money in a depreciating asset, which is what real estate is at the moment. They prefer to wait for the real estate prices to shrink down further, before going for the kill.
  • Demonetization EFFECT: The sudden introduction of demonetization in 2016 killed in one stroke, the cash factor. The real estate sector was a preferred investment choice for parking unaccounted money (most of which were black money). With sudden cash crunch, the real estate sector faced harrowing times, the after-effects of which have still not died down yet. Moreover, now transactions have become more transparent leading to cautioned investment in real estate.

The growing availability of other investment options like shares, gold and other metals, mutual funds and bonds, etc, have also contributed to real estate’s fading allure. Suddenly, other options seem to have become more attractive for investment while also making for more sense.

Though Real Estate may be seen as an unattractive investment proposition in the market as of now, there are certain names that still offer a lot of value for investment. One among them is among the top Builders and developers in Hyderabad, Fortune Builders & Developers.

Fortune Builders & Developers, has an impeccable track record and a solid portfolio of landmark residential projects in Hyderabad’s prime locations; plots in Hyderabad; and most importantly, several valued commercial property Hyderabad. Working with prominent architects and interior designers in Hyderabad, it has built many classic construction landmarks, like apartments in Marredpally, apartments in Whitefield, apartments in ECIL, and residential projects in Kondapur. Every Fortune project has successfully carried the stamp of ingenious creativity, craftsmanship, and comfort value with detailing that guarantees secure living for inhabitants.


The Central Government has taken certain steps like reducing interest rates; bringing down GST rates from 12 to 5% on under-construction properties & 8% to 1% on affordable housing; implementing the path-breaking RERA; etc. Despite all these measures, the market sentiments in major cities still remain sluggish.

Experts believe these measures will take some time before things begin to get back to normal. But that will be a long process for there are a whole lot of other factors as earlier explained that need to show signs of positivity before things really ebb on the real estate front, putting it back on the road to better times.

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