– by Akash Pharande, Managing Director – Pharande Spaces
If you’ve been watching the news lately, you’ve probably seen endless debates about the recent US mid-term elections and the shifting power dynamic in Washington. We are Indian real estate developers and don’t usually follow US political drama – but this time, we paid attention because there was a lot at stake for us, as well – specifically, on what happens on our construction sites and in our sales offices.
From where we stand, this election’s outcome is some of the best news the Indian housing market has had in a long time. In fact, the entire global economy now breathes a sigh of relief. The uncertainty that has been haunting most global trade is finally clearing up. But for our purposes, let us look at what this means for families and NRIs looking to buy a home in India.
It actually boils down to a few very real, on-the-ground changes that are going to make both the building and buying of homes in India a lot easier.
Stock Markets Rally, Buyer Confidence Returns
Look at the Indian stock market right now – as soon as the mid-term election results more or less announced a divided and more predictable government in the US, our markets rallied massively. When the Sensex and Nifty pick up, there is obviously an immediate wealth effect which directly influences housing sentiment.
When people see their portfolios growing once more after almost two years of nothing much at all, confidence surges. The hesitation to make major financial commitments evaporates. A booming stock market is the best indicator of economic optimism – and historically, a significant share of stock market gains eventually flows right into real estate.
We see it at our sales offices – visitors are more confident in their financial situation. Footfalls have risen very noticeably in the last two weeks, and many more inquiries are converting into actual sales.
Cheaper Oil, Open Shipping Routes – Construction Costs Will Drop
As a developer of luxury townships that use a lot of imported fittings and materials, this is what makes me truly excited. For two years now, the global supply chain has been a mess. Thanks to the aggressive trade policies and the geopolitical tensions brought on by the Middle East war, the cost of raw materials skyrocketed due to higher shipping costs – hitting us at the most important junctures of our projects’ completion process.
Now, with a more balanced US government that is getting ready to initiate and announce rollbacks to ridiculous tariffs and insane war efforts, and with oil prices now well below the $100 mark, we have a much saner, calmer global trade environment. We can safely expect a normalization of global shipping routes very soon.
Why should you, as a homebuyer, care about shipping routes?
Well, real estate isn’t just about ‘location, location, location’ – it’s actually more about logistics. When oil prices come down, the cost of transporting cement, sand, steel, marble and luxury fittings also comes down. When shipping routes open up without the constant threat of new tariffs, we get our specialized fittings, elevators, and imported tiles on time, and on budget.
For developers, this is a big relief. Its means that construction will now become more rational, and we won’t have to pass on our cost overheads to you with price hikes. We can deliver our projects and give you possession on time. This time, more than ever before – including the 2008 financial crisis and Covid-19 – we have understood that predictability is indeed a developer’s best friend.
NRI Investors Are Back
Since the mid-term meltdown, we are getting a lot more inquiries from NRIs – yes, even though the Indian rupee is firming up again! The US is now entering a phase of political gridlock, which means that the crazy see-saws we had become used to seeing in the US dollar are now settling down.
For an NRI, investing in real estate when the whole market is volatile is stressful, to say the very least. Most won’t even consider it. The Indian rupee is stronger and gaining further strength, and the Indian economy is now also stronger than ever. Indian real estate is once again the most secure place for NRIs to park their hard-earned money in.
NRIs aren’t just looking at this as just a currency game anymore – they now see the fundamental strength of the Indian market itself (even Moody’s has upgraded us to a 7 again). They can see the growth in our economy, that our infrastructure is expanding (new Metro lines are being announced like clockwork) – and our residential projects also offer them genuine global standards. They want a piece of this stability!
Pune – Where Smart Money is Headed
Developer don’t just look at when people will buy homes, but also where. That’s how we plan our project locations, after all. Now, thanks to these global shifts, specific cities are gearing up for an incredible real estate boom. Pune sits right at the top, along with other IT strongholds such as Hyderabad and Bengaluru.
Why Pune? In simple words – corporate strategy. With a divided US government, US technology, finance, and pharma giants will have their task cut out for them to get domestic policies passed. To protect their profit margins and keep growing, they look beyond their shores – which is why they are locating their GCCs in secure, talent-rich offshore markets.
The well-paid C-suite drives premium housing and a lot of NRIs either hail from or have business connections with Pune. Investors are well aware of how much rental yield and capital appreciation a luxury apartment in Hinjewadi, Punawale, Kharadi or Baner will give them. This corporate growth will need support of and need for integrated townships, smart homes, gated communities and luxury apartments in Pune.
Pune is perfectly positioned for this corporate influx thanks to its generous educated and skilled talent pool, its thriving IT ecosystem, and rapidly growing infrastructure. When US companies invest more and more in their Pune operations, we can expect another big wave of new high-paying jobs – and for Pune’s housing market, this is rocket fuel.
What This Means for You
Finally, buying a home is the biggest investment most of us will ever make. We obviously hope to make such an investment when the economic winds are blowing favourably.
To recap – the stock market is in the green once more, the global supply chains are becoming more predictable and dependable, the cost oil and therefore shipping is coming down, and we developers can once again make good on our promises to give you the best value for your money. We can very logically expect fresh foreign investment that will bring more jobs to cities like Pune.
Yes, the US mid-terms happened thousands of miles away. But they have revived our markets, our personal finances, and our confidence.
Perhaps you’re one of the many who were deferring the decision to buy a home. Perhaps waiting for the right time? Well, that time is now – before the massive demand shift once again spikes real estate prices and takes away the best options. The time to make your move is here.
Akash Pharande is Managing Dir
