Investments in property here continue to yield high returns as always, write B S Manu Rao
A major factor that plays on the minds of prospective home buyers is the course of the growth in the economy. A rising GDP graph with the inflation numbers under control will mean more business and career opportunities, more disposable income in hand and consequently the affordability to plan buying a home comfortably. It also drives more investors into the real estate market looking at the potential of a share appreciation in capital values with the buoyancy the positive market sentiment creates.
A stable and under control inflation rate means a softer approach to the monetary policy by the reserve Bank of India (RBI), leaving banks with more money to lend. This in turn will mean more attractive schemes for prospective home loan borrowers and lower interest rates with the keen competition between banks.
This festival season, there are indications of better days ahead in terms of growing economic activity and inflationary pressures not alarming. The monsoons were good and there are expectations of healthy growth in the agri-sector in the global arena, the US Federal Reserve’s decision of postponing its tapering of the quantitative easing augurs well for industry here. There are expectations of the growth rate going past the five percent mark for 2013/14. A recent factor that has played a role in the property market is the depreciation in the value of the rupee against the US dollar. The attractive capital appreciation that realty here offers is a major draw for investors abroad. NRI’s based abroad and earning in dollars will find this an opportune time to invest in property here. Effectively, the strengthening in the value of the dollar translates into a discount in the property rates. This along with the easier norms to buy property here and repatriate the gains is leading to more money coming into the property market from abroad.
For a prospective home buyer here, in the meanwhile, the most significant factor will be the outlook on property prices. The Metro Rail works progressing is leading to higher prices in the localities served. The suburbs are witnessing more demand as commercial development spills over from the core city areas, thanks to the connectivity with upgraded arterial roads. More IT belts are emerging around the city northern localities around the airport, stretches of outer Ring Road driving demand for housing in the residential catchments serving them.
Efficient planning is the key that will help a prospective home buyer take a sound decision now. It involves prudence in managing finances (including investments), thorough research to identify the best buy, and picking the most suitable loan option. As witnessed in the past, the demand supply equation in the property market is always skewed towards higher demand given the rapid urbanization and the large number of people constantly relocating to this city. An investment in proper will keep yielding high returns as always.