Buy Real Estate for You

Yes, we have all heard about the boom in Real Estate in India, but the question from an investor’s point of view is simple, can he buy cheap and sell dear?

Real Estate Prices in India

Real Estate prices in India, especially in the metros and wherever there is Information Technology led growth, is exploding. Prices are increasing by anything from 100 to 200 percent every year. The Indian Real Estate market is in the middle of an upswing, which might last another four years or so. The land prices are influenced by demand, availability and cheapness of loans, as well as the bubble belief in property.

Cheap Land? Where's that?!

Cheap land today is available only in the outskirts of the cities and even that is fast vanishing. Lot of agricultural land is being bought and converted to Non Agricultural land, which is then developed. So unless you are a big player it is very difficult for you to afford land deals especially in the cities. If an NRI, well, you could purchase smaller properties on the outskirts, but you have to be very careful with the legalities of the same. And if you buy, do not worry; you have at least four years in which to make more money!

Crystal Gazing

Prices of land will continue to rise in spite of corrections; they will then not rise as fast. The Indian economy is all set on a growth path for the next five years and this will only boost demand. Urbanisation is all set to grow even further, and in the next decade nearly fifty percent of the country’s population will be in the cities. As the metros become congested this growth will branch off into the Tier 2 and Tier 3 cities like Cochin, Trivandrum, Madurai, Trichy in the South, Lucknow, Kanpur, Jabalpur, Bilaspur, in the North, and other areas of the east like Bhubaneswar.

Some ground realities

The complicated property laws in India, which vary from state to state, make purchase and resale of land quite difficult. Also the margins on real estate have shrunk as more and more competitors enter the market. The return on real estate investments are estimated to average around 20 percent or less as compared to the figures of 30 to 35 percent being currently touted in the market. Also most of the real estate market is in the hands of family run and other small firms, which are not very professional in their dealings. There is a lot of opaqueness in the way in which transactions are carried out. The big players who have the money as well as the political clout to swing deals continue to dominate the market. The recent allotments of Special Economic Zones in the country are a case in point. All this means that the small and medium investor would continue to be squeezed out. These determinants need to be kept in mind while investing.