Track2Realty Exclusive: Highly speculative markets are always highly susceptible to speculation as such markets are mostly sentiment driven. These are the markets where investors are by and large the project riders and hence the movements in the power corridors do affect the market to a great extent. Coimbatore real estate, on the contrary, is a market which has traditionally been neither susceptible to speculation nor the investors have been on prowl.
Even the speculators who book properties for quick appreciation are not active in this market. Why then is Coimbatore suddenly showing signs of northwards curve post the General Elections? The formation of the new Government at the Centre seems to have made its impact felt in the city business community in general and the real estate developers in particular.
Business confidence index may be a very subjective metrics to evaluate the economic impact of any given market. They nevertheless provide a direction to the transaction movement as well as value of the product due to its inherent co-relation with the demand and supply cycle of the market.
Analysts tracking the property market in Coimbatore are hence trying to find a method in the madness. What is making the Coimbatore property market so bullish after the General Election results? The analysts are also quite conscious of the fact that the business confidence index of the city and its realty market has suddenly gone up pretty high, even though any tangible difference is yet to be seen in the functioning of the authorities in terms of approvals and clearances. Not only that, the policies of the new government have not been rolled out as well that could indicate a positive shift in favour of the business.
The investors, mostly the end users, are yet finding the euphoria in the market and they are being made to believe that this is the right time to buy. They feel failing now the property prices may not again be at this level in near future. Once there is some stability in the market the prices, being at the moderate bottom level, are expected to rise. Also, if there is a reduction in the interest rates in the next two or three quarters the wait and watch buyers will be out in the market.
Divyesh Shah, AGM, CARE Ratings, however, is not finding it unusual in the Coimbatore market. He rather finds a reason behind this euphoria at the macro level. According to him, the general business confidence has improved with full majority of the newly elected party in office. Hopes for improvement in infrastructure, corporate governance, speedy approvals will further aid growth in economy. The same will be reflected in real estate market across India, including Coimbatore which is a more realistic market for the buyers.
“Coimbatore has largely been end user market with majority of demand coming from NRI and retirement homes. The positive investment in the macro economy will augur well for the investment climate in the city. The city is witnessing supply of good office and retail spaces,” says Shah.
Raj Koneru, Regional Owner, RE/MAX Rest of Tamil Nadu agrees that the sentiments and business confidence of the Coimbatore real estate has definitely risen up post elections. He says the point can be assessed by the fact that investors have placed their trust again in the market by investing. The market sentiment has again become quite positive and is going to be the same due to the hope of rising value of the Coimbatore real estate. He, however, does not find any tangible in such a short period and is ready to wait for a long term reforms ahead.
“Any tangible difference on the grass root level is yet to be seen as such changes can only be seen over a long period of time. With time the policies will roll out and it will then lead to a long term and sustainable change. In terms of the change in mindset, one change which can be seen clearly is the faster functioning at all levels which will improve the trust and faith of people and firms in the respective government bodies,” says Koneru.
Analysts maintain that the index of buyers’ and the investors’ sentiments have definitely gone up. However, the change in terms of actual percentage is yet to describe the exact mark. There has been an increase in the customer faith which can be seen by the rising investments in not only the real estate but the other investment instruments as well. The inquiry level with various developers in the city has suddenly seen a northwards curve and it is generally anticipated that it will further lead to improved sales figure for most of the developers.
At a micro level in the city property market, it is believed that now is the time for Coimbatore administration to take certain pro-active measures that can take this business confidence index to the next level of growth. Business confidence, after all, is all about a matter of sentiments which is more of intangible in nature. Only a healthy transaction rate of residential properties and higher occupancy level of the commercial properties can revive the real estate market in terms of tangible growth orientation. The growth has to be a sustainable growth and not speculation in the market, which has historically not been the trend in Coimbatore.
Many within the built environment of the Coimbatore property market are of the opinion that once the Metro Rail Project really takes off, it has the potential to change the dynamics of the city economy and its real estate market. It is one of the primary projects which everyone wishes to see in near future. This will raise the market value of the Coimbatore real estate market exponentially. Also, the emergence of satellite living where the lifestyle options are more contemporary is going to redefine the way Coimbatore real estate has been functioning. Of course, the satellite living needs good physical infrastructure; something that is expectedly on the priority list of the new Government at Centre, and it is a reason enough for taking the business confidence index of the city to the next level of optimism.
