Friday, July 04, 2008
Property prices may not cool down
Worried that property prices may cool down? With India tipped to become the most sought after real estate market among emerging economies, you may not really have to fasten your safety belts just yet. In fact, just 10 land deals in India over the past 12 months were valued at over a whopping Rs 15,000 cr. Evidence enough to prove that reports citing office rentals in Delhi and Mumbai being costlier than more developed real estate markets such as New York City, Dubai and Singapore, are not off the mark. Although Delhi and Mumbai still held on to seven out of top 10 mega realty deals in the country, Hyderabad and Chennai too emerged as hotspots for big ticket transactions. With an acute shortage of land in metro cities and escalating land costs, it will not be long before other locations such as Hyderabad, Chennai, Bangalore, Coimbatore and Pune will grow as centres of major land deals in the near future. Real Estate Investing has probably made more millionaires than any other industry in Hyderabad. Real Estate Investing also offers many rewards including cash flow, security, long-term wealth and numerous tax benefits.
Whether your comments capture reality or not, we shall know soon enough!
I am an NRI from Australia with long and regular connection with India, UK and Australia.
I have seen the rise and fall of Australian & UK real estate cycle twice.
Those cycles have/had the same characteristic as what is happening in India (Except India is more aggressive)
Both equity and real estate Cycle in Australia is about a 7-8 year cycle.
India seems to have longer Cycle 10-12 year.
As an economist and a property owner in India and abroad - all I can say is what is happening in India is extreme greed and speculation - This illogical and unsustainable.
I love to see my property value go up but in a sustainable level and in tandem with macro economy.
I haven’t seen any market in the world that is so untransparent.
SPECULATION IS THE NAME OF THE GAME IN INDIAN REALESTATE MARKET.
I was quoted 1C for a property in Chennai in Dec07 and again the same property (Unsold) in March 08 was quoted 1.3C and now in June the same property (Unsold) he is quoting 1.5C in June 08
The vendor has not sold the property in the past 6-8 months how ever he did not fail to increase the asking price by about 30% every 3 Months
As a owner of properties in India, I am saying it is not sustainable.
One buy great Properties In SYDNEY and MELBOURNE cheaper than Indian cities(5 metros),Sydney and Melbourne's average Income of a Clark, Cook or a taxi driver is about 25 Lacs p/a and a average 2BR flat with 10 -15 Kms to the CBD is about Rs90 lacs.
Greed and speculation will end in pain and COMMONSENCE WILL PREVAIL.
If not 1997 EastAsian economic crisis (Thailand,Malaysia,Indonesia etc) will be repeted in India with a devaluation of rupee followed by inflation linked economic meltdown which would take 10 years to get back on feet.