A person who would like to invest in real estate has a few options to select from. But which option is the right one is one question that remains uppermost in the investors mind. Are the prices going to escalate or will the correction in the real estate market shrink investment? This example only serves to increase the dilemma. Buy Apartments in Yamuna Expressway and Apartments in Noida Extension with modern amenities.
When Noida came up, property consultants told investors to stay clear as the prices were already too high. However, when the government gave the nod for the new airport in Noida the prices in the area shot up further by 20%. What was once considered a ‘no touch zone’ suddenly became the hotspot for real estate investors with the backing of those very same property consultants who had earlier discouraged investments there. Have questions like noise pollution from the aircraft, or the space for commercial projects been considered by these consultants or is the airport enough to escalate the prices further?
Property consultants are also asking investors to invest in those areas that are presently being reconstructed in Mumbai, Noida and Chennai. These areas were home to palatial bungalows but now the old construction is getting a facelift. The buildings undergoing metamorphosis under the ‘surgeon’s knife’ will soon be great investment opportunities as these reconstructed old buildings are in some of the best localities.
Investors could also go in for real estate stocks or invest in the market through an equity fund. These opportunities are for niche investments though and most investors would like to feel real brick and mortar under their hands in exchange for their money. Borrowing to buy a property with the interest rates going up, will also pose a difficulty unless returns are substantial.
The commercial real estate trend in SEZs is quite another story. According to CREDAI there is going to be a demand for IT and IT Special Economic Zones in cities like Pune, Chennai, Hyderabad and Kolkata. Top IT companies like Wipro, Infosys and TCS have already announced that they will be hiring a lot of professionals as part of their growth predictions. Noida based Unitech is likely to be a gainer with SEZ stock. commercial real estate other than SEZ saw a decline as the capital values of commercial properties fell more than the value of rental incomes all over India. Outright purchase of commercial places is likely to continue.
Basically the areas where an investor can opt to invest in, is a mixed bag. There is no real clarity and one does not know if the better choice is in the old reconstructed and redeveloped properties or in areas where new infrastructure like airports and metros could see an escalation. Are SEZ zones the right choice or traditional commercial properties? One thing is certain though that the market is overdue for correction and it’s up to the investor to decide where he wants to put his money.
Analysts have already predicted that property prices will correct between 10-25% in Mumbai, Noida, Hyderabad and Chennai. The over apartment inventory for these cities has been estimated at 22 months and for Bangalore and Pune at 19 and 12 months by the research firm Liases Foras. Most property prices have already peaked and there is likely to be a drop now. With the liquidity in the banks also getting tighter the real estate market is definitely overdue for a correction. So hold on to your capital a little longer as patience could fetch you rich dividends once prices correct and you invest wisely then.
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