Indian real estate market is having dull mood now a days there is no doubt in that. Be they developers, buyers, investors or other stakeholders of the real estate industry in India, are constrained by cash flow issues and transactions are less, though inquiries continue unabated. Year 2013 was being expected to be hope full for property market in India, but seems the things are going on other direction.
Year 2012 was a difficult year for the real estate sector and the trend of subdued absorption continues in majority of the micromarkets. New launches are facing the heat owing to lesser demand while current projects are facing delays: these are tough times, overall.
Indian property market is unique and inimitable – it survives despite lack of incentives and bad policies, global economic slowdown and we are used to a scenario where property prices, instead of increasing are galloping. However for the last one year, property values have been stable and, strangely, not even inching.
It is no longer a seller’s market. For those wanting to sell property, the returns may not be so handsome as to tempt them to seal a deal. The word is to ‘wait for another six months and then take stock’. The next six months will tell you what to do – sell, or wait further!
The buyer can actually be the only one smiling in this grim scenario, provided they have loads of patience and can undertake tons of research. Opportunity comes disguised as hard work in scanning the market, and may lead to some incredible deals.
For the buyer there may be some great opportunities in the current market, which could be tapped. For instance, he cites the recent launch of a residential project at Lower Parel in Mumbai, where Indiabulls was offering a pre-launch 20:80 scheme at Rs 21,000 per sq ft, for ten days. After ten days, it increased the unit value to Rs 25,000 per sq ft; all this in a market which is otherwise operating at Rs 30,000 per sq ft. Those who booked at Rs 21,000 obviously made a killing.
Again, in Gurgaon and Dwarka Expressway, there may be some fabulous opportunities in the resale market; for instance, a distress sale at Rs 6,000 per sq ft in a luxury unit, which is being sold by the developer at Rs 9,000 per sq ft on Dwarka Expressway, is worth considering.
Now is the time when markets are ‘real’ and stable – it is common knowledge that South Delhi is down by 20-25%. It’s the best time to negotiate and drive home a hard bargain. Look out for distress sales, where people want to dispose of a property for quick cash; ‘one man’s meat is another man’s poison’ may hold true in the case of distress sales.
It’s a bad time to sell property but a good time to buy. It is often said that anytime is a good time to buy property if it is for your own use. But, if the property is bought for investment, it’s a different ball game altogether. No doubt that it is a good opportunity for buying properties, but a seller would be reluctant to dispose of an owned property at the current stake.
However, most of the buying and selling decisions are inextricably linked — often the selling of a property fuels the purchase of a newer property. The quantum of money involved in these transactions is such that it has to be absorbed only in real estate. Again, while buying property for self use, especially one that meets all your criteria, there is a good chance that one may have to liquidate the real estate part of your portfolio.
Buyers are very particular and invest only after exploring the entire market; they take a long time to enter into a transaction, giving a sense of the mood of the market. Good projects in good locations are doing excellent. It is neither a seller’s nor a buyer’s market at the moment, but it is an ideal time to buy property since this period of strong stability is a harbinger for a very strong upward trend which the market will see soon. In older projects, the inventory is being offloaded with a minor tweaking of the payment plans to make it more customer-friendly.
Banks have constrained the sector with their inability to facilitate access to capital, either to the customer or to the developers. This shifts the onus back on the RBI to suggest alternative methods of raising capital for purchase of houses or development of real estate. The credit flow to the banks’ is substantial and their inexplicable lack of will to provide access to this sector is a reminder that the time to bring Real Estate Investment Trusts (REITs) is now or never.
The developer adds that they are keenly observing the marketing strategies of attracting buyers, the trend of offering cars and summer travel packages, before they can devise their own marketing strategy. To summarize, the market is drawing interest primarily from the end user. It may be the best time to go for your dream home. Go and scout for ‘value’ deals after enough due diligence and beat the blues away.
Alok Kumar Upadhayay