Is there an Indian Real Estate bubble?

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” – Warren Buffett on Real Estate Investments

Yes and No, it depends!
The news media is bombarded with speculation by the so called Real Estate pundits that predicting the dooms day for Indian real estate. It may be partially true where some regions of the Indian real estate are experiencing corrections while other regions are actually showing healthy appreciation on the investments.

Regional Performance
A report by Magic bricks found that real estate prices are in the downard trend in North India while continuing to raise in South India. The southern region comprising of Bangalore(6%) , Hyderabd(4%) and Chennai(1%) were the best performers. Meanwhile the western region led with Mumbai(3%), Pune(3%) and Ahmedabad (0%). In contrast except for Gurgaon (0%), the city index for other cities in North India (Delhi, Noida, and Ghaziabad) declined by 1% to 3%. Overall the National Property Index witnessed a marginal increase of 1% in the Apr-Jun quarter. So you can see that it is mixed bag.

Will the prices fall?
No, since the economy is strong there is no reason for the developers to reduce the cost and if they do that will affect their reputation. However, to reduce the inventory they are offering deals such as paying the pre-emi during the construction (80/20 offers or 10-75-15 offers) or flight miles. In addition, annually during the winter an event called “Greatest Online Shopping Festival” by many Real estate developers offer nice discounts that could be taken advantage.

What should buyers do?
Softening prices always offers an opportunity to make nice investments. If you are looking to purchase a home begin saving a portion of your income for the investment. Unlike the stock market which is struggling recently and will erode your savings, Real estate is tangible and can be utilized for long term security. Certain regions are really attractive. Other than the following cities, be cautions about your investments.
Pune: Going strong
Due to the advanced technology, locales, and available resources, the city has been attracting many global companies. Due to this, beautiful villas and luxurious homes have been sought by investors in Bangalore, India. So, if you are looking for safe investment opportunities, then Bangalore should be an ideal place for you. The developments in North Bangalore, central business districts, sub-markets in the outer ring road, and Whitefield have doubled in terms of capital value over the last few years. Market reports predict that it will increase even further, and investors should not delay the process of buying their dream homes.
Chennai: Revival time
Chennai – ORR, Vadapalani, Alandur and Ashok Nagar, Chennai, India
The residential market in Chennai has proved to be the steadiest. It was resilient even after the global economic downturn, which was the toughest period for the country’s property market. Luxury apartments in Chennai areas such as ORR, Vadapalani, Ashok Nagar, and Alandur along with the metro rail link road are in demand. South Chennai is one such space in India that is filled with luxurious homes. The real estate market forecasts that potential investors can seek a significant return on investments from this hotspot. The proximity to the Chennai International Airport and development of infrastructure has led to a rise in the demand for real estate in this city, thanks to the Tamil Nadu State Government.
Hyderabad: Back in favor
Properties in Hyderabad offer value for money, and you won’t be committing a blunder by purchasing luxurious homes in this city of India. These days, the sociopolitical and economic scenario is favorable to the real estate sector in Hyderabad. There are multiple projects with beautiful interiors that are being constructed by one of the best developers in the country. In India, Vijayawada is one such hot spot located in Hyderabad that has residential properties and luxurious homes in its vicinity. Speculations reveal that the prices will shoot up in the next few years, and so investors are advised to purchase homes in these areas now.

Closing remarks
While the investment in Real Estate has been the single most permanent way to build wealth we would need to do our due diligence prior to the investment. The saying “Location, Location, Location” has a new meaning for me. Location – Country, Location – City, Location is the specific area in the city. Some of these areas in cities are highlighted above such as Whitefield in Bangalore etc., With the deals abound, you require a trusted partner like me to assist you in the due diligence as well as provide necessary support in the decision making process. If you are on the fence mulling over investing in India, I would like to encourage you to RSVP the upcoming webinar for question and answer session.

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