Should You Invest in Real Estate at this Point of Time?

Many of us are concerned about the overall real estate scenario in India. Indeed, the market has witnessed loads of downturns in recent times. The Mumbai real estate market has been suffering and stagnating on the pressure of unaffordable prices and other problems. This is not a problem unique to Mumbai alone. Even areas in Kolkata, Delhi, Bangalore, Hyderabad and Chennai are witnessing major problems on account of high prices and lack of customer demand. Indeed, customer demand has dwindled by unexpected proportions. Overall customer demand has gone down due to the extremely high prices of property in most areas.

On the other hand, suburban areas are witnessing renewed demand with a slew of affordable housing projects being implemented in these areas in major cities. These areas should be witnessing price increases as well in the future owing to speedy development. Price saturation in posh areas and localities has left developers with little choice in terms of selling inventory. Inventory has been lying unsold and developers are doing their best to lure customers with offers, flexi-payment options and other special benefits. However, this strategy has not been working for quite some time now. Unsold inventory has been putting pressure on developers from various quarters. Alongside, home loans may become more expensive owing to an impending in repo rate courtesy the RBI.

This will force banks to jack up their rates of interest and will in turn, affect demand for property in almost all locations. Alongside, the sector is dreading the aftermath of the land acquisition act which is also slated to be cleared this year. This may make things tougher for realtors and force them to increase property prices by a fair margin, which again, will affect demand. In this scenario, is it really the right time to buy property in Mumbai? Recent reports of price revisions and corrections have raised the hopes of many people with regard to finally being able to invest in Maximum City without any hassles.

According to a recent study and report brought out by leading real estate industry expert, Knight Frank, the prices of real estate have gone down in particular areas of Mumbai. This depreciation has been to the tune of a staggering ten percent and this has raised the hopes of investors by a fair margin. Alongside, these findings have also highlighted the fact that up to 45% of all new properties under construction are yet to find any buyers. According to real estate market experts, it is the same situation in other metro cities as well. Prices are and will be softening steadily in the wake of diminishing demand. Will this make for an ideal investment situation?

According to the national director at Knight Frank India, Mudassir Zaidi, the present time is highly favorable for property investments across India. Major cities have witnessed a dip in real estate prices owing to an uncertain economy, slackening demand and uncertain political climates. Alongside, prices should be rising if there is the formation of a stable government at the Centre after the 2014 elections. This rise in prices will mainly be due to the boost in confidence. However, the reverse will happen in case of a fractured or coalition government assuming the reins of the government. However, Zaidi also feels that the current pressure prevailing on real estate prices will not last for long if there is political stability and an improvement in market sentiments which would lead to price increases as mentioned above. As a result, this indeed makes for a good time to invest in real estate all across India. Even a report issued by Knight Frank states that prices are most likely to see a boost in the latter half of the year owing to the end of the elections and the improvement in economic conditions. However, there are several micro factors to be observed for that to happen.

According to the executive managing director at Cushman & Wakefield, the leading real estate consultancy, this does make for a good time with regard to investing in real estate only if other aspects like job security, business stability, proper financing and all other elements are in place for an individual. Most experts seem to concur on this fact and this should raise the expectations of serious real estate investors. Alongside, the study by Knight and Frank has highlighted the depreciation in prices to the tune of ten percent in certain areas of Maximum City. These include areas in Lower Parel, South Mumbai, Parel and even Central Mumbai. Alongside, stable prices have been witnessed for areas in Thane and Navi Mumbai among other suburbs.

According to market experts, the tide is turning in the favor of real estate investors and buyers. Inventory increases, lower demand and other factors are putting heavy pressure on real estate prices across India. Demand should also remain low throughout the first half of this year according to market experts. Knight Frank swears by an impending correction of prices which should further benefit buyers. Yet, Dutt highlights particular areas in Mumbai which have not yet witnessed any correction in prices. According to him, prices may not decline by whopping amounts but locations in LBS Marg, central south and other prime areas may see greater discounts being offered to buyers.

This will be done to fuel increasing demand. However, before investing, buyers must consider the viability of the location, the scope of accessing proper infrastructure and proper access to prime city locations. Another important factor behind investments lies in the social infrastructure surrounding a particular project. This includes colleges, schools and other educational institutes along with centres of recreation, entertainment, malls, health care provisions, retail outlets and many more amenities. There should be future developments planned for the area in question and there should also be a thriving transport network. These are factors that must influence your investment decision but otherwise, the first half of 2014 is indeed a great time to invest in real estate in India!