Real Estate: Best Avenue for Investments and Right time to buy Property Now

Amidst the global economic slowdown, India's growth forecasts have been revised downward over the last three quarters of the year 2013. The economic slowdown, inflationary pressures, volatility in foreign exchange and stock markets, together with liquidity crunch and costly debt, took a toll on India's real estate sector in 2013.

A recent survey has found an attention-grabbing fact that Bangalore has contributed more new supply of homes than even primary NCR regions of Noida and Gurgaon, which happen to be more investor driven markets, in the year 2013. While home builders and buyers in Mumbai and NCR were worried, people in Bangalore had a reason to cheer. Bangalore's property market bucked the trend in other metros with many new launches, good demand and resilient prices. Further, the residential market in Bangalore is largely driven by end consumers and is very stout. This implies that people buying homes are more concerned about the real value of a home as opposed to a speculative value of a property that investors would look at. So, Bangalore has more real value that is a sure formula for growth.

Real estate market is booming tremendously in Bangalore. There is a constant increase in the value of homes and properties as people have started investing a huge proportion of money on property than on any other options such as gold, stocks or mutual funds. Since August last year, a good amount of commercial space is being absorbed in Bangalore because of good connectivity and infrastructure, especially in the ORR (outer ring road) region in East Bangalore. This upswing in the commercial segment usually results in an upswing in the residential segment.

In the past, it has been observed that the time gap between a commercial and residential market upturn was about eight or six months to a year. So, the third quarter of this year can see a buying spree in the residential segment. Apart from East and North region, Bangalore appears to be growing in all directions but in each region of the city there are specific areas that are getting attention. In North Bangalore, Yelahanka has always been a preferred site but over the last two years Thanisandra has seen a good growth trajectory. It may be the availability of land parcels at viable prices and the propinquity of the location to the outer ring road that have resulted in this growth. In south Bangalore, Bannergattha, Kanakapura and Sarjapur road and Haralur have seen a good development.

Albeit Bangalore's positive expansion aspect, there are couple of challenges that are very distinct. Real estate is one of the most capital intensive industries in business. Finding sources to generate capital is probably one of the biggest challenges.

Secondly, the approvals process which requires interacting with various agencies drags the project time line considerably. In many projects, the course of approvals takes eighteen months to two years and development is stuck in limbo during this period. The other area of concern is the acute shortage of skilled or even unskilled human resource.

Real estate today is the best available investment option, fetching a minimum return of 10 to 15 percent per annum. There are foreign sectors and a considerable number of NRIs investing in the real estate in Bangalore. On the brighter side, fall in rupee value does not influence the current real estate market but in additional view, the sliding rupee value does not do any good for the real estate market because it drives up the cost of input drastically. The reason is that nowadays most of the interior finishings in any real estate project, the plumbing and sanitary ware, the wooden flooring, marble, certain kinds of paints, the wall finishes etc. come from overseas such as Europe, South East Asia and China and bought in dollars. Since home buyers are usually keen on certain brands and exclusivity for the gaze and ambiance, 15 percent slide of the rupee against the dollar results in a proportionate increase in the cost of production which invariably get passed on to the consumer.

Buying a property called a home, is a big step in one's life. However, when preparing to buy a home, sitting on the fence waiting for the price to fall is not a good strategy. There is always a value decided on a property sooner rather than later. Due diligence is a must and there is no two ways about it. One can use buyers' forums online that can give a fair idea about the property as well as a comprehensive list of documents that need to be verified before booking for a property.

The real estate sector in India as well as in Bangalore is witnessing a rapid growth in the residential segment. Dwellers can make best of this boom and make their dreams come true in reality.

Source: JLL India