Real estate is a favorable investment option and hence one of the most preferred choice. But are the high prices going to last long enough or another US like property bubble is in the making? Probably not, feel the experts. Stay invested is the buzz.
Real Estate remains an attractive investment option
1. Houses and commercial real estates are in short supply, but their demand is high.
2. Demand for housing and commercial establishments is always going to increase as population increases.
3. To a certain extent, real estate is free from market ups and downs as against stocks.
Few other investment options match the potential of real estate in terms of earning returns. However, most analysts caution that a price correction in the realty sector is in the offing, particularly in the NCR region and Mumbai.
An interesting development is taking place, meanwhile. A wait and watch strategy is being employed by both developers and prospective buyers. While the developers are holding on to the high prices, the latter are waiting for them to fall. Who will hold the sway in this tug-of-war remains to be seen.
Here is another important statistic. In 2011 when equities took a beating, prices of nearly a quarter of total homes on offer remained firm. In the same year, houses prices in most of the Tier-I and Tier-II cities rose, barring Ahmedabad where the prices remained flat.
Investors who put their money in real estate gained much more than those who speculated in stocks. This is a clear indication that while stocks are vulnerable to market pressures, real estate is a sound investment alternative.
Demand for real estate, commercial as well as residential, remains high but it is in short demand, thereby driving up the prices.
Balaji Raghavan, CEO & CIO, Real Estate Fund, IIFL states, "NHB data itself show shortage of more than 20 million homes. There is an acute shortage of homes, especially in and around the main cities due to population migration that is happening due to growth opportunities. As a result, prices have generally tended to increase over the medium to long term."
His views are echoed by Om Chaudhry, Founder & CEO, FIRE Capital and Chairman, Astrum Homes, "The shortage in many markets and the sticky nature of realty prices in India contributed to the firm trend."