Wednesday, April 25, 2012

Indian Real Estate Market: Bubble or a Bit Trouble.

A fear of bubble is in the minds of all those who want to buy or invest in real estate now a day. But without looking at the actual event, it should not come with any conclusion that wonder bubble in India.

Indian real estate industry is growing at a CAGR of more than 30% on the back of strong economic performance of the country. After a bit of a downturn in 2008-09 revived quickly and displayed a huge growth. Market value according to the project construction increased from $ 70 bn at end-2006 to $ 102 bn at the end of June 2010, which is equivalent to 8.2% of the nominal GDP of India "in 2009. In addition, Government liberalization initiatives standards of foreign direct investment in the field of real estate in 2005, the introduction of the law, SEZ and allow private equity funds in the field of real estate, were key factors that have contributed to this enormous growth of the "low price" that attracts buyers and investors, not only from India, but NRIs & amp; foreign funds also have money in the Indian market. Aggressively launching new projects in the builders, moreover, has further enhanced this positive mood, which paved the way for the rapid growth of the market last year.

Now the question is whether it is a bubble forms in Indian real estate market? Please note that look at the recent housing bubble in the United States, Europe and the Middle East. In addition to economic factors were important factors in the rapid increase in price bubbles beyond affordability, House property of mania, I believe that real estate is a good investment and feel good factor in the rapid price is a major cause of a real estate bubble.

Against the Indian scenario, all of these factors operate in major cities of India, particularly in the phase of the cities. Prices have risen, and Crossed the earlier pick in the 2007 cities such as Delhi, Hyderabad, Chennai, Kolkata, Hyderabad, Bangaluru, Gurgoan, Chandigarh & amp; Pune. Although the duration of the cities such as Hyderabad, Delhi and Noida Gurgoan spent 25-30% higher than the market selection 2007. However, in the 2008-2009 during the economic recession, prices fell by 20-25% in those cities. The second factor is the default property and real estate is a good investment belief mania. Investors and buyers is based on is attracted by the end of 2009 and lower than the prices began injecting money into the real estate market.

Level-the cities of Hyderabad, Delhi-NCR, Bangaluru, Kolkata, Pune, Hyderabad, Calcutta has shown the largest investments in real estate projects. The developers have taken advantage of this enhanced feeling and began to start new projects. This increased the more buyers and investors, who had missed the opportunity to purchase or invest in the past, trust between, which has grown to more than the price unrealistically quickly. And finally, it seems like a good author is also the last month.

If we are talking about the stock market bubble, or the real estate market, the key is called the "feel good factor", where everyone feels well. In the last years of the Indian real estate market has increased significantly, and if you have purchased a property, you are likely to be more than money. A positive return for investors fueled so that more people have seen it on the market and decided to invest in real estate before they "missed". This impression is at the heart of any bubble, and it has happened several times in the past also in the 2008 Stock market crash, 1980 during the Japanese asset price bubble and Ireland the same property on the market in the year 2000. A good impression of the author was fully implemented in the real estate, until recently, and this is a key factor in the real estate market bubble. Even negative information about the patch or real estate market bubble flow then people are still very positive growth in real estate in India.

Looking at the above factors, there is the possibility of forming a bubble in several cities in India, but it can hurt buyers and investors only if it bursts. Large bubbles form with the internal pressure and may remain on artificially long did not work outside the force. Similarly, in the case of markets property bubble may burst if demand and prices falling suddenly and dramatically. Some results of recent studies by consultants business icon further shed light on this.

On the basis of most investors from Delhi, Hyderabad, bangaloro, Chennai, Kolkata, Gorgan, Chandigarh & amp; Pune currently is not ready to invest in this price level and does not clear any increased recently. Mainly about the distribution and book return on investment. Another factor affecting demand in the supply. In a city like Hyderabad around 6500 apartment size 45 million meters under construction, but most developers worried about lack of attachment to 100%. The same situation in New Delhi and other major cities of India, which showed a higher than expected enthusiasm. Although the developers give a positive outlook for the market, while at the same time an appropriate level of confidence is very low, which gives the negative signals from lower demand in the near future, but. The third important factor is the expected inflow of Foreign Funds. In India, as the placement of investment attractive to Fund huge, published in the Indian market of real estate by foreign institutions and nerys. But now the real estate market in the United States and the Middle East and Europe and has stabilized and began to grow gradually and, therefore, attract foreign funds to lower prices. It is expected to create huge Fund to withdraw from India foreign investors sees more opportunities in these countries. All these factors may act as an external pressure that may lead to fracture the bulb.

No comments:

Post a Comment