Getting real about real estate

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Realty firms on hiring spree againDLF profit crumbles 77%Realty demand up 15% in Q2‘Property rates to fall 25% in 12-15 months’

: “Buy land, they are not making it any more,” said Mark Twain a long time ago, surely not in India or anywhere else for that matter. But the asset bubble seems to have burst. Blindly investing in real estate thinking that land is finite in supply might not be advisable at the moment. While there will be corrections and recoveries and even growth in certain properties, the time for secular growth is behind us.

Therefore, the need to be careful while investing in real estate is important. Now, you could choose the direct method or a via media through several private funds available in India and overseas. But the critical factor to remember is that transparency in India, for real estate deals, is still dismal.

Transparency factor

The 2008 Jones LangLaSalle transparency index made on a few key factors, namely, performance measurement, market fundamentals, listed vehicles, legal and regulatory environment and transaction process was recently released.

While Indian players may have chosen to boost their egos over the fact that our tier 1 cities have shown some improvement, further scrutiny in the matter shows us where we truly stand. While agreeably transparency in these cities have increased over the last two years, where we rank in the world, or even among other BRIC or Asian countries leaves a lot to be desired.

While India Tier 1 cities have had a change in score of 0.20, the fact remains that we are the 18th biggest movers and Brazil, Russian, China among other emerging markets have improved far more. So a movement to Dubai, even if rates are high, might be interesting purely because there exists a high degree of transparency.

Looking at the overall performance levels, India Tier 1 & 2 cities stand at the 50th and 52nd rank, while our Tier 3 cities are 62nd, this out of a total of 82 countries rated and ranked. While we have made progress no doubt, there is still a lot to be done if we wish to stand up and be counted in this large world of real estate. India's Tier 1 cities have currently shown improvement, but unfortunately still rank below the other BRIC nations.