The global financial meltdown has had the first level impact – that of shocking the world and causing the global markets to crash. Once the markets recaliberate their expectations factoring in a new set of rules for the game, a new paradigm will emerge. Double digit growth and greed will be replaced by cautious optimism and realistic growth.

Fortunately, India's GDP has an extremely large component of domestic consumption, and as we see the reality of the global meltdown being completely absorbed and factored in to our future projections and expectations, we will see the result of the strong domestic demand.

2009 will be a year where we will see the results of the active government intervention in fending off the global crisis. While there is still a lot more that the government can and claims that it will do, the fact that customers still need homes will set in. This, complimented with lower real estate rates, lower interest rates and better incentives to customers to purchase homes will go a long way in rebuilding the entire real estate industry.

We have already seen a change in the customer sentiment towards purchasing a home and expect that the currently visible trickle of change in customer sentiment towards purchasing a home will translate into a normal buying cycle. The reality is that customers are astute and have started to realise that while buying at the absolute bottom is a near impossible task, the downside risk from current levels is fairly low. Further, the purchasing power has improved substantially with the current market scenario.

The drop in interest rates from 11.5% to 9.25% combined with a reduction of 15% in real estate rates has resulted in an increase in purchasing power of 33%. The same EMI would, at a lower interest rate provide for a higher loan. The higher loan used to purchase a home at a lower price would enable the customer to purchase more square feet.

The transition of the real estate market will however lead to some fundamental differences this time. Customers will purchase based on need rather than based on the euphoria and hype we saw in 2006-2007. Already, sizes of homes have reduced and customers will be more circumspect in their purchase decisions. At the developer end, the indiscriminate growth will also give way to more rational and safer growth plans. Plans that are not based on arbitrage between cap rates between domestic and international markets and excel spread sheets but on the fundamentals of brick and mortar.

I believe 2009 will see the customers who have deferred their home purchases in 2008 take the decision and purchase their homes given the affordability impact as well as the tremendous need for homes in the country. As a result of the reduced number of projects launched in the last 12 months, we will see better projects developed by reputed developers being sold out sooner.