Big Home Buying Regaining Demand

Two and three bedroom homes, which commanded high popularity among home buyers from Pune in pre-meltdown times, have made a comeback. The last three months have demonstrated that the aspirational buyer is returning to the residential market again to check out developers’ sites in search of good deals, a report by real estate research and advisory firm (JLLM).

A major shift was seen from the large size homes in the 1200-1600 sq ft area bracket to one bedroom and studio units in the “affordable” category. The general buyer preference has once again evolved to 2-3 BHK flats, the most popular price tags falling within the range of Rs 25 to 35 lakh.

According to the report, projects that were put on indefinite hold during the financial crunch are now seeing the light of day, with construction once again on a war footing across the city. Projects that are due to be launched within the next six months are being advertised heavily. For projects to be launched within the festive season, developers are not offering freebies and esoteric incentives, but are focusing on price discounts for limited periods.

“The slowdown has brought about residential space affordability and availability in areas that were previously out of reach for middle-income buyers. Due to reduction in pricing, residential property buyers now have a choice of attractive deals in preferred areas,”

Lalit Kumar Jain, vice-president of Confederation of Real Estate Associations of India (Credai) said. “The feeling of uncertainty in buyers’ minds is reducing and stability is returning. We see demand picking up for property in the Rs 30 lakh -Rs 1 crore price bracket. Vice-president of Credai Pune, Rohit Gera, said there are other factors responsible for the renewed interest in property buying, apart from conversion of pent-up demand. “The increased feeling of job/income stability and the realization that the prices have finally bottomed out are driving the buyers,”

Is buying real estate a profitable idea?

Improvement in the overall economic sentiment coupled with liquidity due to a recent upswing in the equity markets have renewed consumer confidence in real estate. “Residential real estate in particular has always been a safe investment option. Developer Vijay Wadhwa advises parents to opt for real estate as long-term planning for their child's future. “Especially for parents of the girl child,” he says. “Real estate is probably the best long term investment one can make. It remains in your child's name, and the appreciation in value over the

years makes it a safe and secure option. Or even while planning for your old age, real estate is always an asset,” he adds.

Looking at the present market scenario, the market sentiments are improving, and real estate is among the biggest beneficiaries. “After witnessing slow movement over the past few months, Mumbai is seeing an increase in demand in the residential sector.

Additionally, increasing focus on affordable housing for low and middle income groups has resulted in the launch of several low cost projects, most of which are concentrated in the peripheries of Mumbai. This has also opened up new investment options for those who did not have bigger investment units or major amounts that could be invested,” he adds. “Softening of home loan interest rates and correction in capital values by some developers has resulted in the anticipation of increased demand during the festive season,” says Narpat Mehta, director, Kanakia Group. “We are expecting an increase in demand from both end users as well as investors,” he says.

For many, real estate investment is an essential part of a well-rounded portfolio,” says chartered accountant, Tarun Ghia. “For those who want to be in real estate but in 'paper' form, real estate offers several opportunities: REITs (Real Estate Investment Trusts), options, property oriented mutual funds, and other mortgage backed securities,” he adds. Historically, buying and selling real property, or even long-term owning, has proven to be one of the most profitable, least risky investments available adds Malik. “But keep in mind, the operative term is: 'least risky'. That doesn't mean 'zero risk' - there's no such thing in investing. Prices can always go up or down, relative to other goods and investment channels. So, get educated about the market and the law. Make purchases while minimizing costs like fees, repair charges, interest rates, etc.

Have sufficient cash and other liquid assets to be able to hold until the time to sell is right. Follow these guidelines and you'll never have any reason to regret making real estate investing a major portion of your portfolio.