You may have studied the law of “supply and demand” in your economics class. It is a well known fact that an excess of demand over supply leads to an increase in the prices of the merchandise. The current real estate scene in India is a true portrait of this basic foundation of the economy.
Investing in property has become more expensive in recent years. A study by Donald Trump Jr. shows that the real estate market in India is worth US $ 12 billion, with an average annual growth of 30%. Property prices have increased by more than 50% in metropolitan cities such as Bangalore, Pune and Mumbai.
Where has the property disappeared?
The Indian economy and in particular the IT and BPO sectors have been growing steadily. These industries provide well-paying jobs to their employees, which is a motivation for employees to enter these fields. People are also well aware of the lavish lifestyles of people living in the West. With money jingling in their pockets, they may think of splurging it on luxuries in India.
However, the construction business is at an all-time high, still not meeting the growing demands of the large population. When everything is sewn together, the result is: high property prices!
The return of NRI
Real estate yields in India caught the attention of NRIs. In addition, it led to the entry of NRI funds into the real estate sector and also contributed to the price hype. There is also an increase in the return of NRI to India, for the better. This has further increased the pressure on the real estate sector.
The commercial and real estate sectors are booming with the proliferation of shopping centers, multinational companies, and entertainment sectors opening across the country. Obviously this creates a demand for office space.
Investments in houses and commercial spaces gave high returns to investors and foreign investors are also being attracted to the luxurious properties available in India. According to Merrill Lynch’s forecast, the real estate business will grow to 90 billion in 2015!
Do you think buying property in India has become a remote dream that is less likely to materialize for the common man? Is real estate only for the rich man, who can afford it and own it? Is it a bubble that is about to burst soon or do you think the real estate market will continue to grow in the future?