Resicom – Holiday Investment – 04-21 – LB

Indian Property Prices To Stabilise

With the New Year now upon us, many investors are trying to plan for the coming 12 months. There is some positive news for those interested in India, with industry experts saying that prices will not fall further. This makes it an opportune time to invest.

Indian sales levels have slowed considerably, causing concern for many investors; however, experts in the industry believe that 2016 will not see further price pressures. This means, theoretically at least, that prices should currently be as low as they will go, making it easier to snap up a bargain and make money in the future. Responding to the issue, the chief executive of Tata Housing, Brotin Banerjee, said that prices have already dropped by 15% in the past 12 months. ‘But, I think that we are really looking at the bottom of the barrel as far as the prices going down is concerned,’ he said, adding: ‘If you look, the construction costs haven’t come down. Yes, the steel and cement prices may have come down but labour costs have gone up, statutory dues have gone up and I don’t see any significant reduction in land pricing happening.’

Elsewhere, Anita Arjundas from Mahindra life Space Developers also commented that due to the modern era’s payment-linked plan development launches, the price falls noted over the past year have corrected themselves and will not fall further.

There are, of course, numerous unsold apartments across India – they have been hitting the headlines and that is perhaps putting off potential investors. However, it is here that Ms Arjundas has set the record straight, stating that the vast majority of unsold inventory lies in idle projects that have not noted any construction efforts in three or four years. The chief executive of Godrej Properties, Projsha Godrej, added that past developments have seen misdesign and bad pricing, however, in popular locations where trusted construction companies are producing property, there is not the dramatic sales slowdown that many believe to be rife.

This does not mean the Indian property market is suddenly set to see a surge in 2016, of course, but it does suggest that things may not be as bad as first believed. Mr Godrej expects the market to begin recovering sooner than many might expect; in addition, he believes the resurge will be sharper than the forecasts. Over the coming decades there will be strong demand for Indian property, he explained, adding: ‘India today still only has 30 to 35% population living in cities; that is dramatically going to increase over the next few decades. Indian income is continually growing, it may not grow as fast as all of us want but 7-8% GDP growth is nothing to scoff at and when countries go through this kind of growth stage, real estate is a sector that always benefits disproportionately.’

Overall, the property market in India is set to see growth over the coming years. This means foreign investors happy to move into the country for long-term returns should look for potential opportunities now, before prices start to gain.

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