Should You Buy Property Now?

The real estate market has been booming in metros such as Mumbai, Delhi and most other cities across India and many companies engaged in real estate business are planning to tap the stock market to mop up funds for expansion of their businesses. In fact, most of the developers – listed, unlisted or otherwise – are upbeat about the prospects of their business going forward and are gearing up to scale their operations and make their presence felt across segments and geographies. “The real estate market, like the stock market, had a strong rebound in Q3 and Q4 2009. The residential market in particular performed well in most cities. The global slow-down brought the focus of the developers back to quality of construction and delivery timelines. The real estate markets is very rapidly becoming ‘brand’ conscious. Developers with strong execution capability are in a position to command premium compared to other developers,” saus Berinder Sahni, Associate Director - Investment Sales, Colliers International.

However, one needs to take a closer look at how the property prices have moved in various cities, and within those cities, in the micro markets to take a call on whether or not to buy. So, let’s look at the scenario city-wise.

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’. “After the great slowdown, people requiring accommodation are in the market to buy flats. Demand for budget flats is very strong. Demand for commercial space is slowly picking up. In Mumbai and Delhi, scarcity is governing the trend and hence there is a big rise in price of residential properties in prime location,” says Lalit Kumar Jain, Chairman, Kumar Builders.In about six-and-half months from October 2009 to mid-April 2010, property prices in Mumbai have risen sharply by about 15-50 per cent, depending upon the location and the amenities offered by the builder (see table: Mumbai Property Rates).Although the economic crisis of 2008 had a sobering effect on the property market, the prices still went up by about 10-15 per cent in 2008 as compared to 2007. However, the effect of economic slowdown began to tell in the first quarter of 2009, when prices declined by about 15-20 per cent almost across the city. But as the economic recovery picked up, prices began rising steadily in second half of 2009 and by April 2010, with some select areas such as Lower Parel, Mulund, Worli, etc witnessing hefty price rise of as much as 40-60 per cent as compared to 2007. Overall, real estate prices in Mumbai have gone up by about 24 per cent till April 2010 as compared to prices in 2007 (see table: Property Price Movements in Select Cities).