Is Indian Real Estate Heading For A Bubble?

Sanjay Dutt is CEO – Business, Jones Lang LaSalle India

Are we looking at the formation of a bubble in Indian real estate? It’s possible, but only in the cities where prices have actually skyrocketed beyond affordability. It can be argued that they have done so almost everywhere in the country, but the fact is that local people are still buying homes on a as-needed basis in most Tier II and Tier III cities. Nor is the supply in most of those cities either overly constrained or curtailed. So, when we talk of the possibility of a bubble, we’re actually only talking of property in Mumbai and Delhi right now.

Delhi’s was the real estate market that led the correction, and Mumbai was the last in line. Both bounced back after the introduction of stimulus packages and the Government’s direct actions in restructuring debt, which staved off further fallout on the Indian sector. Also, both these markets had in any case reached the bottom.