Coming to real estate many of the big cities in the emerging markets have a ‘strange’ trend . We have large inventory of unsold houses and also a large number of middle class families living in the suburbs and not able / willing to upgrade .
Real estate prices are falling and are expected to fall further due to the following reasons :
However we have to realize real estate in not a homogeneous commodity .The best analogy I can think of is like the equity market . Like in equity market even when the overall market goes down we see some company share doing well . We have to separate the HLL and Colgate's from the Kingfisher Airlines of the market . ( HUL and Colgate stock have done extremely well whereas Kingfisher Airlines has gone bankrupt )
The same applies to real estate . We have to understand the following before making real estate investments :
In conclusion the real estate market in India is maturing . It won't be like it used to be in the past !
My friends use to tell “ Investment in real estate is a no brainer . India has such a huge population so demand and price will keep going up. Gurgaon has gone up by 100 % i three years ! Also you get bank loans to leverage . Thus the post leverage returns are much higher . Buy pre launch and sell post launch . Its that easy !!!” It sounds more like the Harshad Mehta days of equity trading !!
One thing is certain for now , making money in real estate will not remain that easy any more.