On Episode 448 of The Core Report, financial journalist Govindraj Ethiraj talks to Kunal Sodhani, vice president at the Korean Shinhan Bank
(00:00) The Take: India’s Spiralling Real Estate Market
(04:21) Markets hold ground, gain in the first trading session
(05:18) The rupee hits another record low, what is the outlook?
(14:46) Oil rises on perception of slow Chinese recovery
(16:25) Another steel company gets into car making
The Take: India’s Spiralling Real Estate Market
Between January and May, DLF sold nearly 3,000 luxury homes in Gurgaon, priced at Rs 7 crore or more, with 25% bought by NRIs. Across India, premium properties are in high demand, driven by wealthy Indians bidding prices higher, while the middle class struggles with inflation. A Reuters poll predicts home prices will keep rising, driven by the richest 1%, owning 40% of India’s wealth, leaving most unable to buy property.
Affordable housing has slowed, as lower-income groups cannot make even minimal down payments. Analysts warn premium housing demand may sustain price rises short-term, but the rich alone can’t prop up the market indefinitely. Discontent is visible in Bangalore, where rising rents squeeze young professionals. India’s lack of large-scale affordable housing like the UK’s social housing has fueled slums, putting the burden on individuals. High real estate prices distort savings and create an illusion of economic strength, triggering housing stock surges, as seen in China’s unsold homes crisis.
Markets & More
Despite weaker-than-expected GDP growth and Donald Trump’s tariff threats, Indian markets ended positively last session. The BSE Sensex added 445.29 points to settle at 80,248.08, while the NSE Nifty50 closed at 24,276.05, up 144.95 points. Mid and small-cap stocks outperformed, with Nifty Midcap100 and Smallcap100 gaining over 1%.
Rupee Hits Fresh Low
The rupee hit a record low of 84.7050 before closing at 84.6950 on Monday, marking a 0.2% drop—its worst single-day fall since India’s election results in June. Kunal Sodhani, Vice President at Shinhan Bank, attributes the rupee's weakness to outflows and a strong US dollar. An Axis Bank report suggests the RBI ease its tight control on volatility, allowing businesses to better hedge risks. With $655 billion in forex reserves, the RBI has ample capacity for intervention but may need to gradually shift currency risks back to markets.
Oil Prices
Oil prices rose above $72 a barrel after signals of recovery in China, the world’s largest crude importer. Brent futures rebounded following a 3% dip last week, as China’s factory activity showed tentative improvement. Meanwhile, OPEC+ delayed its supply meeting by four days, likely postponing plans for a production increase for the third time.
Since mid-October, oil prices have fluctuated within a $6 range, influenced by geopolitical tensions and shifting demand. India, as a significant crude importer, remains attentive to these developments.
Windfall Tax Scrapped
India ended the windfall tax on crude and refined products. Initially imposed in July 2022, the tax aimed to capture revenue from global crude price spikes. Collections fell to 60 billion rupees in 2023–24 compared to 250 billion the previous year.
Steel Company Enters EV Market
JSW Group plans to launch EVs under its own brand, investing Rs 27,200 crore ($3.2 billion) in Aurangabad to produce passenger and commercial EVs. While two-wheel EVs dominate, four-wheel adoption remains slow, with EVs accounting for just 2% of passenger car sales annually. JSW’s move could shift India’s growing EV landscape.
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#realestatecrisis #IndiaHousingCrisis #affordablehousing #luxuryrealestate #thecorereport
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