Prices have already started going up for residential real estate units, with many markets seeing high single digit hikes throughout the last 12 months. Experts feel that quality should drive residential real estate investments while buyers should cautiously foray into the market.
One aspect behind higher prices is the rise in salaries in the information technology space. Anand Moorthy, Chief Business Officer, Data Intelligence and Asset Management, Square Yards, opines that with rising demand for skilled talent from the cryptocurrency, ed-tech and blockchain segments, along with other start-ups, salaries have doubled. More people are now venturing into the housing market while existing home-owners are upgrading to bigger homes as a result. The earlier industry churn led to weaker and unorganized developers leaving the market, leading to a consolidation of market presence for organized and reputed brands who deliver projects in a timely manner. These factors have boosted the confidence of buyers as a result.
The realty sector is already grappling with skyrocketing input costs, accelerated by the pandemic and Ukraine-Russia confrontation. Developers are no longer in a position to keep absorbing these costs increases, while further price hikes in the sector may affect demand according to some experts. Other indicators of possible risks include recent updates regarding job losses in the cryptocurrency and ed-tech segments. The real estate space will also feel the heat of a bigger benchmark rate increase by the RBI if inflation is not tackled in the short-term.
Some experts feel that home prices and loan interest rates are still at far lower levels than several decades. Hence, it is the best time to invest in real estate for lower ownership costs. They recommend investing in high-quality residential projects by top developers, picking from 2, 2.5, 3 or 3.5 BHK units with attractive amenities.
Experts like Moorthy advise entry only for a discount. He feels that while launching a new project, a developer is usually willing to provide a discount for the first 10-15% of his housing inventory. Buyers should learn about the market price and invest only if they can garner a discount of 15-20% according to him. He also recommends an exit within a period of 18-24 months once the prices touch market levels. Other experts advise against overpaying for premium features and other amenities since it could hinder long-term returns. Some advocate investments in properties which may be rented out. This will ensure returns of 2.5-4% for buyers. Look for areas which are due for a connectivity or infrastructural boost, since price appreciation is higher in such localities. Some experts advise buyers to bypass pre-launches in spite of lower prices and other attractions.
For a detailed report on this read the articles we were featured in:
Business Standard – https://bit.ly/3MzLtX4
Published Date: June 7, 2022
