Is it the right time to buy realty now? Or should you wait for a while? Will realty prices drop ever?
In an hour-long chat on rediff.com, Gulam Zia, national director for advisory services, Knight Frank (India) Pvt Ltd, answered to readers' queries. Here is the transcript:
Gulam M Zia says, Hi, hope i didnt keep everybody waiting.
pradeepkikani asked, hai n hello mr.zia,i am from coimbatore .this city has developed in leaps and bounds .no body would have dreamt /rather rise in sudden property prices .sir,it's still worth byuing now or i should wait .i am thinking to invest either for agriland or industrail purpose .seeking your advise .
Gulam M Zia answers, at 2007-08-14 14:33:42Most of the questions are on the current correction in property rates. So let me first address the general situation before answering Pradeep's question. To begin with, property prices have started a downslide, but it is more so for residential properties only. The commercial properties havent yet started on the downward curve except for a few locations in Bangalore and NCR. Regards to housing / residential properties, we have observed in general a 10 to 15% downslide in many markets of Mumbai, NCR, Bangalore, Jaipur, Chandigarh and other tier I cities Tier II cities though havent seen this correction yet.
pradeepkikani asked, hai n hello mr.zia,i am from coimbatore .this city has developed in leaps and bounds .no body would have dreamt /rather rise in sudden property prices .sir,it's still worth byuing now or i should wait .i am thinking to invest either for agriland or industrail purpose .seeking your advise .
Gulam M Zia answers, To answer the specific question on Coimbatore, this city hasnt yet peaked on its real estate dynamics. We shall on the short terms see rates remaiing stable but on a longer term perspective, say 5 years or more, the prices are expected to appreciate here.
hari asked, What about realty prices in Greater Noida, do you expect them to rise over nxt 3-5 yrs with the international airport coming there ?
Gulam M Zia answers, Currently, the prices in G NOIDA have cooled down a bit. This trend though shall change in long term perspective, with the airport and other infrastructure projects taking shape we shall see handome returns on G NOIDA properties.
nagabhushan asked, dont you feel that increase in real estate prices tempting more farmers to sell their agricultural lands and thus the villages in near future will be having more poor people and distructing indian agrarian society.
Gulam M Zia answers, In recent past we did see a mad rush for land acquisition by the developers. This has lured many farmers to sell off the land. But recently, the goverment has taken some steps to discourage the acquisitions. On the other side, the urbanisation is increasing the expanses of the cities which is directly putting pressure on the farmlands in the vicinity of these cities to move further away. SO the need of the day is to create emplyment for these farmers close to their lands. The current spread of economic activities, as SEZs, is equally spread across the country to create enough opportunities all across.
kamal asked, Why the hell these prices are going so high? How could a normal middle class person would buy the house? Who are responsible for this steep rise in the prices? Why government is not putting any check on all these?
Gulam M Zia answers, The anguish is extremely wide spread. While the inflation in real estate industry is unprecedented, the Govt has done a lot to check the incresing prices. To begin with, they have made the funding to the developers extremely difficult. On the other side, by increasing the interest rates on home loans, funding is made difficult even for buyers. This has reduced the volumes of transactions across the markets. Now for a developer, it is getting extremely difficult to maintain the high prices. We already are observing corrections in many markets where the prices had gone very high. SLowly, this shall spread to other markets as well. An average correction of 15 ti 20% is expected in prices all across.
baddyfriend asked, Do you think the real estate prices as of now are a bubble, about to burst anytime or do you think that the price-rise has a fundamentally strong backing and we may see them go up still further?
Gulam M Zia answers, To begin with, the real estate prices this time are definitley not a bubble about to be burst. The over all economic growth is good enough to avoid any sudden crash in values. The prices are currenlty on a correction path with about 20% reduction on cards. But this correction is seen more in those areas where the appreciation was unsustainable. Where ever did we see the price rise backed by a tangible value add, like some good infrastrucure development, the rise would be sustainable. In such places, the prices may even increase.
vikshr1 asked, Hello Sir, Is this time ok to buy a plot in dehradoon
Gulam M Zia answers, Dehradun, like many of tier II cities, is on a growth curve. Good infrastructure projects have been announced, we also see keen interest from the IT sector, which always playes a major catalyst for real estate growth. Keeping it all in mind, it is definitley a good time to invest in Dehradun.
PrinceLey asked, Can we see real estate as a short term inverstment alos keeping in mind the variation in confirm prices rises every fortnight
Gulam M Zia answers, Investment in real estate is always a long terms strategy. The only exception are the punts once can play on rapidly fluctuating markets, but this could be extremely dangerous in case of a slowing market. Current slow down in the real estate prices make it a strict not starter for a short term invement in real estate. On the other side, we are expecting real estate mutual funds making inroads in India. Once that happens, the risk associated with short term investment could be lesser.
atheeq asked, In terms of appreciation is an individual home better than apartment,what shall be average difference ?
Gulam M Zia answers, Appreciation is hugely based on the market dyanamics, the demand supply scenario has a big role to play in it. It then also depends on the geographies, many tier II cities arent yet comfortable with apartment culture, and hence the appreciation on individual houses here is going to be higher.
rajaraja asked, I've been looking at a plot in Faridabad in sector 45 / 46 for some time now. The prices here have increased manyfold over the past five years but have now stabalisd. Is this the right time to clinch the transaction or would it be better to wait for another six months in the hope that the prices will slide / crash. On the flipside, is there a possibility of prices climbing further. Please solve the dilema for me.
Gulam M Zia answers, The prices are supposed to reduce in next 2 to 3 months. The turnaround is expected only around the festival time, that is Diwali and after. The prices post Diwali shall be totally dependednt on the sales in the festive season. If the sales are sluggish even during this period then there could be further reduction in prices.
Gulam M Zia says, The questions are over-whelming. In this one-hour duration only a few could be answered. These were purely randomly picked. Thats it for now. Hope to see you all later. Thanks.
