Real Estate Today- Housing Sector ; Investor Vs End user

Real Estate in India 

The real estate sector is one of the most globally recognized sectors. In India, it is the second largest employer after agriculture and is slated to grow at 30 per cent over the next decade.The Indian real estate market is expected to touch US$ 180 billion by 2020. The housing sector alone contributes 5-6 per cent to the country's Gross Domestic Product (GDP).

Mumbai is the best city in India for commercial real estate investment, with returns of 12-19 per cent likely in the next five years, followed by Bengaluru and Delhi-National Capital Region (NCR).

Real Estate Analysis in India 2015

Recently, RBI Governor Raghuram Rajan said that the industry must bring prices down to attract buyers. "If real estate developers bring down prices, it will be a big help to the sector. Once there is a sense that the prices have stabilised more people will be willing to buy."  While prices are likely to stay stable at one end, affordability could improve too
Investors and end users are  in a wait and watch mode following news reports of a massive unsold inventory in the system. Buyers are postponing their decisions, leading to a huge supply overhang. 

Thus leading to a terrible slow down in realty industry and leaving the investors in property also in the same heat. While stated prices remain elevated, transaction prices have already fallen by 10-15%. Discounts have increased significantly in the secondary market.

This does not mean that real estate prices will come down by 30-40%. A 30-40% crash can happen only when the economy goes into a recession. Our economy is doing well now, the GDP is growing at a good pace, inflation is down and foreigners are investing in both manufacturing and e-com businesses, 

But it means there will be a slow rise, in real terms. In major markets like the National Capital Region, property prices have risen 1% in the past one year. Due to the oversupply, the prices are expected to remain flat or register a marginal growth in the next 12 months.

When the crop is in abundance, and there isn’t a high demand, is when you should make a big bid. Anecdotal evidence of realism dawning in realty transactions is good news for buyers. 

What buyers can do / Investors Vs End users 

Delhi-NCR

NCR suffered due to inventory overhang. Lack of sales and stagnant prices kept investors away. Prices are not expected to fall further in near future. However, launches from builders and secondary market transactions are still happening at rates below the brochure and asking price. Investors should stay away till stability returns.

Mumbai 

While the affordable segment of the residential market is expected to remain flat, the luxury segment is facing pricing pressure. Anything priced above Rs 4-5 crore is finding few takers. Investors should stay away because the situation may remain like this or may even worsen. Since we are already in a buyers' market, the end users should use the current opportunities to get maximum discount from the sellers.

Chennai 

The real estate market in Chennai is heading for a revival due to the political stability there. It is the affordable segment that is generating customer demand while the mid and luxury segments are getting only lukewarm response. Though the investors can stay away for the time being because the expected return is below the cost of funds, end users should not delay their home purchases. 

Kolkata 

Experts don't see chances of a recovery in the near future. Though there is some traction in the affordable segment, the high-end segment continues to be a reel boon for end users. Since no price appreciation is expected in the immediate future, investors should stay away for the time being. 

Hyderabad 

After falling out of the favour thanks to the Telangana movement related strife, Hyderabad realty is slowly coming back to the limelight again. Cost of housing is very low in Hyderabad and it also has very good trained manpower. So business will be happy to move in so long as there is no disruption and power related issues. Though the investors can stay away for the time being because the expected return is below the cost of funds, end users should not delay their home purchases. 

Bengaluru 

Bengaluru has emerged from the shadows of Mumbai and Delhi with the highest number of launches. "With 31% of overall India launches in April-June, Bengaluru has left NCR (25%) behind for the first time in recent history," says Anuj Puri, Chairman & Country Head, JLL India. Though it still doesn't make sense to buy as an investment as the expected return is below the cost of funds, end users should not delay their purchases. 

Ahmedabad 

It has not been able to attract companies from the IT, FMCG and finance sectors, necessary for driving up prices in a big way. The automobile sector, which was leaning towards Gujarat, has also begun deserting it for Pune in Maharashtra. With not much migration happening to the city, investment in homes here may not fetch good returns in the immediate future. End-home buyers, however, should use this opportunity to strike better bargains. 

Pune 

"Pune is the only city that has shown double digit price appreciation in the last two years," says Ashutosh Limaye, Head of Research & Real Estate Intelligence Services, JLL India. Though the investors can stay away for the time being as the expected return is below the cost of funds, end users should not delay their home purchases. 

Experts Advice :

Since the trend is clearly down, there is no need for investors to jump in right now. There is enough and more ready stock in the market on the block, both in primary and secondary deals. Stick with primary and secondary first sales (sale by first owner) to be safe. You would be surprised by the bargains you can get. Experts advise end-users to utilise this opportunity to buy their dream house. Infact, softening in prices is an excellent opportunity for end-users to purchase a property.