A closer look at some of the leading property markets of the country, like Mumbai, Pune, Chennai, Hyderabad and Bangalore, clearly suggest that the market is poised for an upswing in the next few years. More importantly, it is not just the analysts but also the home-buyers who are today; ready to bet high on the long term growth story of the property market in these leading cities.
The question is in the absence of high paying economic activity like IT/ITeS will the city keep the desired pace to sustain the projected growth and the life style. Critics often point out that in the absence of steadfast pace of economic activity the market may end up being another investors’ haven. However, developers active in this market maintain that more employment opportunities have seen people preferring to stay in Bhiwadi than commute to work. Also, a large number of floating population from nearby cities and across the country is still high, which needs to be catered to in terms of their aspiration and lifestyle choices. The rise of nuclear families have further seen emergence of more demand for dwelling units in the region.
Despite delayed implication of demonetisation and recent layoffs by technology companies, due to automation and changing technology, commercial market continued to remain resilient, backed by sustained expansion plans of the major occupiers. The Gross office take-up in India amounted to 9.6 mn sq ft (882,800 sq m) in Q2 2017 representing a nominal 2% increase Q-o-Q from 9.3 mn sq ft (Total office absorption in H1 2017 stands at ~18.9 mn sq ft, as per Colliers Research marginally down by 2% from, H1 2016)
The development is currently under construction and is expected to be completed in the last quarter of 2018. The project has been one of the star performers of the London residential market with over 78 units worth almost USD 170 million (GBP 130 million) sold since its launch in May 2016. Construction is being carried out by Multiplex, the construction arm of global investment major, Brookfield.
A closer look at the sales methodology of the developers suggests while they exaggerate some USPs of the project, they very smartly conceal the information to make their offer look very lucrative to homebuyers.
Urban planning experts believe this is a much deeper question because it is not just about the existing urban centres but also about the way urbanisation is eventually going to happen in this country. As per the UN statistics the urban population of 40 crore in India would be 60 crore in less than 20 years of time. It clearly suggests that the existing cities won’t be able to fit in this additional 20 crore population, whether indigenous or migrants.
It is the roll out of the policies by the respective urban bodies that have been behind the BKC emerging as a case study of urbanisation with booming economy while Noida ending up as a ghost city sitting over piles of unsold housing stock. Both the markets nevertheless had the tremendous potential in its early stage of inception.
Most of the homebuyers as well as the other stakeholders of India’s housing market share the sentiments of this homebuyers. The Reserve Bank of India has indeed surprised many while keeping the repo rate unchanged at 6.25 per cent at the beginning of the new fiscal year. Even a symbolic rate cut would have helped the market change its outlook towards the economy.
In terms of pure economics renting out a property as against buying it may sound to be logical due to poor rental yield across India, the market reality beyond fiscal prudence is not that simple. In most of the Indian cities the tenants have to pass through a number of uncomfortable questions ranging from food habits to personal lifestyle choice before they can get a rental property for living. The process itself is very tedious and prone to leave grey zones.
How many affordable homebuyers who leave to work early morning and come back late night actually need amenities like free Wi-Fi, amphitheatre, club, tennis court, swimming pool etc? Are many buyers in the average salaried class in a position to avail these facilities even though the developer has created e everything within the project? How long such fancy amenities are maintained once the project is over and the monthly maintenance charges are a huge issue?