ptemIf buying a property is figuring on your shopping list, one of the questions that would invariably confront you is whether this is the right time to finalise a deal. Would waiting for a while longer get you a better bargain?
The stock answer if you are planning to buy the property as an end-user is that any time is a good time to buy and waiting for a better price could be fraught with danger. But what if the home buy is intended for investment? In the present Indian context, it is difficult to give a definite answer to the question of where the property market is headed and whether one would make a decent gain on the investment.
The real estate euphoria that ran through several years of the past decade when annual capital appreciation in favoured destinations across the country was as high as 20 to 30 per cent, or at times more, is over. The days when one could invest in property with the certainty of making a quick gain by flipping it within a couple of months are gone.
There is a lull in the real estate sector. Supply is exceeding demand resulting in likely muted capital appreciation. Builders have consistently refused to bring down prices despite common economic sense suggesting that they should. However, this time round there is a growing feeling that developers may find it tough to hold prices and that a correction is in the offing.
The broader economy is showing no signs of improvement. Inflation remains high, while home loan rates are sure to firm up as the
central bank tightens liquidity in the system. This might force prospective home buyers to push back their purchases even as more supply hits the market.
On the other hand, builders are also under immense pressure. Lenders, who are already reeling under higher non-performing assets due to the economic slowdown, are likely to be cautious in lending to real estate, which is always considered a high-risk portfolio. Input costs are spiralling. These might force builders to offload inventory at a discount. The fact is that this is a market where buyers have to be cautious and highly targeted.
However, within the general lull, there may still be sub-markets that might give decent returns due to their location advantages and the infrastructure surrounding it. In the cover story of our annual real estate issue, we bring to you some of the best locations to buy property to make investment gains. We also tell you whether commercial real estate is also a good investment, and if so, where you might find some decent buys. Also, in case you are going to a lender to fund your property purchase, read our story on home loan facts which could help you in negotiating a better deal.
We also start a new series
on investment-related issues of non-resident Indians with the first article on buying property in India in this issue.
SARBAJEET K SEN
Executive Editor
