and market trends vary between cities. In other words, there is no way to generalise when it comes to property investment viability.
Cities with a high level of job creation continue to see high volumes of real estate supply and absorption. Cities with few or no economic drivers to spur the growth of employment fall behind. Earlier, Mumbai and Delhi attracted the most talent from rural areas. Today, it is IT-centric cities like Bangalore, Hyderabad, Pune and to an extent Chennai, are now emerging as whole new real estate propositions as IT companies there are expanding their operations.
With inflation and construction costs moving northwards, the price trends are changing dramatically.
The graph clearly indicates that supply trends in real estate have are in a state of flux. The supply of products priced below Rs 3,000 per sq ft is reducing markedly. From 43 per cent in Q4 of 2009, supply in this segment will come down to 8 per cent in Q4 2013. Meanwhile, supply in the price range of Rs 5,000-10,000 per sq ft is expanding.
On the surface, aspirational and affordability levels are driving such trends. However, smart residential property investors will identify the right products priced below Rs 4,000 sq ft in key growth cities as the best option. In cities like Bangalore, Hyderabad, Chennai, Pune and Gurgaon, one can still find good projects in this price segment for long-term investments and appreciation.
The time-related value of money and inflation are two key parameters that one needs to take into consideration. A careful study of the graph above and factors in the growing population, it is easy to see that intelligent investments into residential real estate in India will definitely pay off over the mid-to-long term.
— The author is CEO-Residential Services, Jones Lang LaSalle India