The Right Time To Buy
Experts believe that buying property in a sluggish market, when rates are stable and there is enough inventory to choose from, can prove to be a rather good investment.
There is no doubt that the Indian property market is going through a downturn. But this is a cycle – the market goes through phases of growth as well as depression. For instance, at present, there are more houses ready for sale than there is demand for. If we look at the difficulties developers are facing in selling homes, the Indian market is sluggish, though still not at the lowest point of the trough.” This is Anuj Puri, Chairman and Country Head, Jones Lang LaSalle India, an international property consultant with offices in India. However, according to him, this is also the best time to buy property. ‘‘The demand for intelligently-priced units will always be there,” he says. ‘‘This is a good market to buy in for people. The property prices are stable and are unlikely to go up too much, since developers want to ensure the sale of the units. There are interesting bargains available in the market. There is a good inventory to choose from. Buying into a township project will give you access to beautifully designed homes, with great infrastructure.” It helps that inflation is, by and large, under control and the RBI has reduced borrowing rates. According to Mudassir Zaidi, National Director – Residential, ‘‘The year will see home buyers benefiting from reduced borrowing rates, increased developer-focus on affordable homes, largely stable prices, better job and income prospects. Affordable luxury housing will clearly be the flavour of the season in 2016.” He suggests buying into an under construction property so that you get a good price from the developer, are in a position to raise funds to buy that property in case you are looking for a loan, and are able to actualise a much higher price for your property once the market bounces back. Zaidi says though the real estate industry has been going through hard times for more than a year now, for buyers, Indian real estate is more lucrative than it has ever been before.
Here are three major reasons why Zaidi and Puri suggest buying in a sluggish market:
The price growth of apartments has been more or less flat in the major Indian cities for more than a year.
There are handsome discounts on offer and buyer-friendly home loan deals that can actually make a lot of sense in today’s market conditions. In short, this is a buyer’s market.
Real estate is a far stable asset than other financial instruments which people invest in. Real estate investment remains rock solid, even in adverse market conditions, with an extreme scenario of a nominal loss. The share market does not provide this security, and can in fact wipe out an entire life’s savings in a day. The Indian government’s smart city plan is likely to shore up the property rates. It may take a few years to initiate the process and complete these undertakings. However, the real estate market operates on anticipatory sentiment, so property markets in those cities will start showing more buoyancy. This means that real estate investments there will yield better returns in the long run.
Given the lack of risk involved in purchasing a property and the kind of yield it can achieve from both rent and sale, buying real estate in sluggish market could be the most logical investment.