The real estate sector has really girdled up the loin and has reduced the prices of the properties in an attempt to surge demand. Not only that due to factors like unsold inventory, over supply and others the prices in cities are recorded to be stooping lower. The trend watchers say that this decline in prices has pushed investors out of the realty market and this is the time the end users are rejoicing. The prices in few cities have become stagnant and in few other cases the realtors and the builders are offering distress discounts. The investors say that they are unable to come out or exit out of the multiple investments they have done in the properties in the last few years. This is increasing the pain of the investors.
In cities like Mumbai the average
surge in residential prices have been of the order of mere 3.3 percent in the
year 2015 but in contrast the hike in prices in 2014 was 7 percent. This was
pointed out by a study conducted by the global property consultant JLL India. The
same situation is noted in the cities where the problems arises in the realty sector like Bengaluru, Chennai and Delhi-NCR
which are big investor markets. The report of JLL says that all these markets
have witnessed a surge in prices in the range of 2 percent in the last quarter
of 2015.
The experts opine that the signs of
maturity of any realty market is slow and gradual increase of prices which is
somewhat similar to the situation of financial capital markets. The cities of
the nation also shows similar kind of situation says the top officials of JLL
India. The forecast for the y-o-y increase percentage for the city of Mumbai was
6 to 7 percent for 2015. The forecasted increase for the year 2016 was
predicted as 6 percent as well. But the actual increase as says the experts, is
expected to be much lesser. In such a situation the investors are not getting
much of confidence to invest but it is a great time for the end users opines
many. The investors feel on top of it that there is a trend of negative
appreciation of properties in the realty market today.
The subject matter experts from Estate
Agents Association of India opined that the current realty market does not
offer any incentive for investors in the real estate market. The reason is the annual
appreciation of properties in the major cities of India is lesser than 5
percent and the yield on lease rental is about 1.5 percent per annum. That is
the main reason for the investor’s reluctance in investment in the realty
sector. But the association sources opined that there are better instances also
which has shown better appreciation percentages like Kolkata, Pune and Hyderabad
where the annual hike in prices has been of the range of 5 to 10 percent.
In Mumbai the estimates at the sub
market levels reveal that South Central and the Eastern suburbs witnessed an
appreciation of 4.3 and 4 percent respectively. The hike in prices in Northern
Mumbai was noted to be 3.9 percent and that in the western suburbs was recorded
at 3.5 percent. Outside the cities the appreciation noted was in the order of 3
percent. The appreciation noted in Navi Mumbai was in the order of 6 percent.
