Future of Real Estate Market
By Brij Mohan Chaturvedi, M.Com., FCA
Real Estate market is on upswing as economy is growing and new job opportunities are available. Corporates are re-organizing their business and so the employees are getting better positions and easy availability of financial supports by way of Home loans for residence are all contributing. The Real Estate market is seeing a definite demand inflow for the ready to occupy premises. The short supply is visible due to unfinished work and delay in several projects, which are missing their deadlines. This is tightening the priceline for the ready to occupy Real Estate stock, which some people termed as a new Real Estate bubble but this is actually a demand supply mis-matched, which is causing Real Estate prices to keep going up.
In long term there is tremendous amount of premium property which will come up for occupation in next 2 to 5 years time and when this supply will come there will be correction in the premium property market of mid-town sector. In India, as economy is growing and as there is a shortage of 30 million residential housing stock as per government’s calculation, the investment in Real Estate will keep rewarding except for some minor corrections in densely populated areas such as mid-town in Bombay.
During last 3 years, when the world economy including India has faced unprecedented financial crisis since 1930’s of great depression, Reality prices in India has gone up by 20% to 60% in most of the cities except in city of Bangalore, Hyderabad, Jaipur and Kochi where due to over-supply and economic slow down, prices came down by 20% to 40% from 2007 prices. Now there is no such risk of Economic slow down in India on the horizon. Industry has learned the lessons and therefore Real Estate Industry will see good times except for some minor pockets where excess supply will be delivered at the same time. In general, Investors should not think that they will get the cheap bargain as actual user on the strength of growing economy and their growing capacity to serve the housing finance debts will pick up all the supplies.
