By 2020, the India real estate market is anticipated to reach US$ 180 billion by 2020, according to Indian Brand and Equity Foundation.

In the sphere of property development, there is mad rat-race of competition among the real estate players. Each one is trying to be the trail blazer, so that the others could follow suit. According to Indian Brand and Equity Foundation, the housing sector will contribute 5-6 per cent to the country’s Gross Domestic Product (GDP).

With the liberalization of the economy, the real estate demand in India has gone up by notches, due to increase in business prospects and migration of labour for housing and commercial segment. Currently, real estate is playing a vital role in pushing the country’s GDP.  Its growth is connected to improvement in hospitality, entertainment and economic services and information technology (IT).

The analysts, real estate developers in Bangalore and other real estate players in India expect the housing prices to go up by notches in the coming days. One of the reasons for a rise in property prices include popular educational institutions in India, attracting truck-loads of students across the country. As a result, it has led to high demand of rental accommodation and hostels. By cashing on this opportunity, they have been constructing residential projects in the city.

Read more to find out the major factors impacting real estate demand in India:

Increasing afford-ability of consumers

Over the past decade, the standard of living and net income of the consumers have risen by an exponential margin. The entry of foreign companies has created several jobs. As a result, the demand for housing and commercial properties has increased considerably. Although, in rural areas, the standard of living has not improved.

Economic growth

High economic growth of India under the present government, has led to real estate boom in India. There has been extensive infrastructure development as the government has allowed 100% foreign direct investment. That said, macroeconomic factors have created growth in the real estate industry of India.

Government policies

Subsidies and government policies have an effect on the real estate sector. The government can create demand in the real estate by offering deductions, tax credits and subsidies. With this, the investor can understand the changes in demand and supply and at the same time notice developments. In fact, there are many factors that play a crucial role in influencing the real estate market. To assess a potential investment, investors need to understand the nitty-gritty’s of real estate market.

Interest Rates

The ability to buy new homes depends upon the interest rates. A meager change in interest rate can have an impact on the buyer’s ability to buy new homes. As interest rates plunge, the cost of borrowing declines, which creates good demand for real estate. Whereas, when interest rates increase, there is less demand in the market.

Consumer’s vigor to invest

The consumer’s confidence plays a major role in understanding the real estate demand. If consumers are risk-averse by investing in a property, then it means they have confidence in the real estate market. For instance, when the interest rates on home loans are reduced, consumers express assurance in real estate. This leads to a spike in real estate demand.


The surrounding area near the apartment plays a decisive role in creating real estate demand in a particular locality or neighborhood. For example, the railways, airports and prime locations such as hospitals, malls and schools are the issues which influence real estate prices.

Consider this

Over the past one year, the hinterland of kandivali had a stable real estate demand, but now there has been a spike in real estate prices due to a new metro station. The surroundings can have an impact on real estate prices.

Stock Market

The country’s stock market has a substantial influence on its real estate. They majorly work on credit. The real estate is considered to be a lucrative option, if the stock markets are bullish. At the same time, the bullish markets result in lower interest rates due to robust economic outlook. However, during the 2008 recession, when the stock markets took a beating, the real estate took a hit.

Bottom line:
All said and done, the real estate developers in Bangalore and other players from the cities will expect the government to improve the business climate, so that buyers will have the confidence to invest in homes!