It has become difficult for a common man to make out of his livelihood in these days of inflation. Prices of commodities are sky rocketing. Even the basic necessities of staple food including vegetables are not within the reach of poor and middle class. Real Estate is no exception to this. The costs of developed immovable properties such as sites, flats, villas etc are no the constant rise since last five years. The prices of immovable propertieshave gone up beyond expectation. As the property developers normally launch their projects keeping in mind the needs of the little class and of NRl s, the prices quoted by them for their properties keep away the poor and middle class people. It is unfortunate that the housing needs of poor and middle class are not seriously tackled either by the property developers or by the Government.
The globalization saw the boom in real estate industry for about six years or so. Now for the last couple of months, we have been seeing recession in all sectors including the real estate market. The recession hasvery badly affected the share market. The commercial banks have tightened their lending policies resulting in the non-availability of loans to the developers and the individuals. Job opportunities have come down considerably and the recruitments in industries and trade have come almost to a halt. Not only this, there is retrenchment of staff in various organizations.
The recession has badly affected the people who are employed in software and multinational companies. Persons who have borrowed money from financial institutions for investment in real estate are not in a position to strictly adhere to the repayment schedule and the employees who have no such borrowings are cautiously planning their investment options and the real estate gets their last priority. It is noticed that the value of the properties inMumbai has come down to the extent of 30% to 40%. The downward trend in Mumbai has its impact in other major cities like Bangalore. Bangalore is considered as the fastest growing or developing city in the country.
The investors during the boom in the real estate felt that Bangalore as the safest metro for their investments in property. The boom took the prices of the properties in Bangalore to an unbelievable height. The prices were up by almost cent percent in certain parts of the city. The developersinvolved in development of properties took advantage of the situation andincreased the rates beyond expectations. A situation was so created that only the affluent and NRI s could think of investments in properties. The locals had to satisfy with rented premises only.
However, the situation is now totally changed with the downward trend in the market particularly in the realty sector. The slump in market has resulted in a large of number of residential flats and other properties being vacant and developers are eager to dispose of these properties at the earliest and before crashing of the market further. The developers are now trying theirbest to woo the buyers, particularly local buyers, by offering attractiveincentives. But, the buyers would prefer to wait for some more time and see if the downward trend bring down the prices to their expectation.
It is also noticed that a large number of real estate projects are in the pipe line and the developers have to make all possible efforts to complete the projects and market them soon. If the under construction projects are not completed soon by taking effective measures, the projects would remain in their present condition only since people would not be interested to invest in the under construction projects for obvious reasons.
It is desirable that these projects are completed before the situation goes out of their control. In fact to effectively market the properties and to take advantage of the situation, the property developers may adopt new marketing techniques of offering concessions like lowering the costs to the realistic levels, defer payments, arranging loans, etc. They can also consider letting out the flats on rentals instead of keeping them vacant indefinitely with the hope of getting higher prices when the market improves.
Those who have ready money or could raise the required funds for buying the property may benefit if they invest now in the readily available properties. Developers may also benefit if the ready for occupation properties are disposed of without waiting further for higher returns.
The situation now is such that the property developers desire to market their real estate quickly while the purchaser wants to wait for further crashing of the property prices. In the present scenario noting can bepredicted. However, the downward trend, it seems, would continue for some time more and it is uncertain to predict as to when the situation would stabilize.
year. Many young investors made property investments at the zenith of the property cycle last year. Two apartments were bought at the same time by several on the assumption that they would finance one by selling off the other at a high price. Now they are stuck as they bought at a steep market rate and have to now service two EMIs. Some of them have begun to default. Many who had their bookings for apartments with Mis. Parsvnath Developments are approaching the developers to cancel their bookings and want to get their money back.