With the improvement in economic conditions, property price have picked up in some metros, Tier-I and Tier-II cities across India. The global slowdown brought the focus of the developers back to quality of construction and delivery timelines. The real estate market is rapidly becoming brand conscious. Developers with strong execution capability command premium over their peers. In this backdrop our analyst Rahul Sonthalia gives his views regarding investment in property in various metro cities of India now.

Mumbai

  • Mumbai is a ‘hot property’ when it comes to buying or selling real estate
  • The buyers here pay a steep premium because a residential or commercial property is a coveted asset in this ‘city of gold
  • While demand for budget flats is very strong, demand for commercial space is slowly picking up
  • Real estate prices in Mumbai have gone up by about 24.0% till April 2010 as compared to prices in 2007
  • Volumes in 1Q10 in Mumbai dropped compared to 3Q09 and 4Q09 due to price escalation
  • Most developers focus on premium housing because of higher margins, though the demand for mid-income housing is high
  • Buyers and investors may be advised to wait for correction and then enter the market

Delhi & NCR

  • The October 2010 Commonwealth Games in New Delhi have proved to be a big trigger for real estate in Delhi and NCR region
  • Rising demand for residential and commercial property in Delhi and NCR regions have driven the property prices quite high
  • Further, new Metro links have provided boost to property prices in the city and NCR
  • Volumes in 1Q10 in Delhi dropped compared to 3Q09 and 4Q09 due to price escalation
  • The end-users can buy a home now as the prices are expected to go up further due to the ensuing Commonwealth Games
  • As for investors, they too can enter and make decent profits in about a year’s time

Kolkata

  • The property prices in Kolkata had risen by a whopping 59.0% in about a year-and half since 2007
  • After the rally, realty prices have remained stable in the second half of 2009
  • Prices in areas like Salt Lake City, Maniktala, Lake Town, Bhawanipur etc. 60-100 per cent in first half of 2009 as compared to 2007 prices
  • Since the prices have already appreciated quite a lot, it is advisable to wait for the prices to correct and then decide on buying/investing

Bengaluru

  • The lag effect of the global economic crisis which began in late 2007 and continued till end-2008 saw prices of residential and commercial spaces declining sharply in 2008 as well as 2009
  • However, the fall in property prices was arrested in second half of 2009 as prices began to stabilize
  • With the revival of the IT sector, the positive impact will be felt across all markets
  • This may be the ideal time to buy or invest in residential and commercial properties

Chennai

  • The fall in demand from IT professional for residential properties and IT companies for office space saw property prices correcting in the second half of 2008
  • Property prices have stabilized in the second half of 2009 and with revival in demand expected from IT professionals and companies, one can expect prices to show an upward trend going forward

Author:Rahul Sonthalia, Research Head, Kredent