Political stability hailed as key to revival of property market in India

The strong majority gained by the winning Congress Alliance party in India's recent election has helped to boost sentiment towards the property market.

It is hoped that a new government with a firm mandate can lay the foundations for lasting reform but there is a lot of work to be done in terms of infrastructure and the collapse of the property market has highlighted the need for more affordable homes, something that the major developers are taking on board.

Chronic infrastructure needs must be addressed according to the Royal Institute of Chartered Surveyors the commercial sector has suffered in the global economic downturn, its latest report on the country says.

Construction activity fell for the third quarter in a row in the first three months of 2009. 'The Indian real estate market continued to see activity declines across office, retail and industrial sectors,' said RICS.

A recent study by Goldman Sachs put the undersupply of affordable properties in the region at 30 million units. 'The property and construction sectors could therefore benefit from any government measures to address these shortfalls. The here and now remains challenging,' added the RICS report.

India's largest listed real estate companies are also pleased by the election result. Rajeev Talwar, group executive director at the developer, said that a stable government and a view that the economy may be improving would help demand for real estate after a property slump that has seen prices crashing by up to half.

'I think we've done a fair amount on price correction, realistic pricing or aggressive pricing as it may be called,' Talwar added.

He expects demand to rise and sees public-private partnerships as the key to addressing the country's affordable home gap.

DLF expects middle range property to be a big part of its business over the next few years. The developer has been offering substantial discounts on its projects and claims that sales are up 20%. 'There is a demand if pricing is appropriate, aggressive, and competitive. People need to see the value for money,' a spokesman said.