Track2Realty Exclusive: Data for the past few years show that real estate has been a rewarding asset class. For example, in 2011, one of the worst years for equities when the Sensex fell nearly 25 per cent, prices of homes in most Indian cities remained firm despite the overall economic uncertainty, both in global and domestic markets.
During the same year, prices in nine out of 15 cities covered by the National Housing Bank’s residential index, called Residex rose, except in Ahmedabad, where prices remained flat. In comparison, in real estate stocks, the value of investment fell by nearly 50 per cent between December 2010 and December 2011.
Even if one considers the period from end-2008 till March 2012, which saw a widespread slump in equity and property markets worldwide due to the global financial crisis, real estate in India gave positive returns in most instances.
As many as 11 out of 15 Residex cities gave positive returns during the period, the only exceptions being Hyderabad, Jaipur, Kochi and Bengaluru.
Experts believe that the wide gap between demand and supply in real estate will keep prices firm over the long run. “NHB data itself show shortage of more than 20 million homes.
There is an acute shortage of homes, especially in and around the main cities due to population migration that is happening due to growth opportunities. As a result, prices have generally tended to increase over the medium to long term,” says Balaji Raghavan, CEO & CIO, Real Estate Fund, IIFL.
Om Chaudhry, Founder & CEO, FIRE Capital and Chairman, Astrum Homes, agrees that the shortage in many markets and the sticky nature of realty prices in India contributed to the firm trend.
“Real estate and commodities provide safety from stock market uncertainty. When the stock market was going down, investors shifted towards commodities such as gold and silver and real estate as they are safer options. Real estate prices do not fluctuate as much as stock prices, keeping the money of investors safe, and gives good returns,” says Chaudhry.
…to be continued
