September 24, 2014

Local Real Estate Market and Trends

Local Real Estate Market and TrendsMost view the real estate scene in India with intense optimism. A few, however, tend to be more sceptical – they see the rainbow as a mirage; and the pot of gold as a false promise. However, the arrival of the Modi administration with its business-friendly stance has done much to boost the Indian real estate sector. Many initiatives like building on real estate investment trusts have attracted huge chunks of foreign investment. Although the real estate sector welcomes foreign investment, it is in no way dependent on it and is perfectly capable of flourishing on its own. Real estate developers in India offer many schemes like possession-linked plans in which 70-75% of the price is paid only after possession, which is really a steal.

The steaming debate at the moment is whether or not India is engulfed by the dreaded “property bubble”. This term has acquired a chilling reputation after the devastation dealt out by the recent recession – a blow from which the world has yet to recover. A property bubble, simply put, is a phenomenon identified by swift and steep increases in real estate valuations, followed by an abrupt and deep descent. The Great Recession saw the “popping” of property bubbles all over the world.

There are claims that the Indian real estate market has been in the “bubble state” since 2008. But  the market has seen an ascending graph for the past 10 years and a bubble is only a temporary disturbance. In fact, supply trails demand by roughly 5 years in the Indian real estate sector. There is a deficit of decent residential space in most major Indian cities, which ensures that there is enough demand for a decade to expect price increases of 10-15% over 5 years.

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