Is price correction in real estate expected? A look at Delhi NCR, MMR, Pune and Bengaluru markets

Updated: Jun 21, 2020 4:48 PM

In exceptional cases, developers will like to absorb losses with the major intent of turning around the inventory.

 new buyers and investors, EMI and moratorium offers, price correction, real estate, Delhi NCR, MMR, Pune and Bengaluru marketsPrice Correction in Real Estate: Developers offering discounts will be limited to slow-moving inventories.

By Ankit Kansal

New Buyers and Investors: The world is going through a big transition, the transition of sorts that will change the way humans interact with their surroundings and the different elements that are part of it. Real estate as an industry plays a vital role in building these surroundings and spaces for individuals. The industry even during the lockdown has undergone several adaptations and is all prepared to be accommodating with the new buyers and investors preferences as the world gradually prepares to unlock.

Why invest now?

Real estate developers are keen on selling their properties like never before due to the jolt faced by delayed construction at their new projects. Prices have continued to remain the same since past few years now, lucrative EMI and moratorium offers are here to save you from the burden of uncertain cash flow during this Corona phase. Government is keen on giving the boost to real estate & infrastructure industries.

India with a population in billions is one of the youngest developing nations, while the economy revival and overcoming from the infection is going to take some time till the vaccine comes. The country is definitely not going to settle with lesser opportunities. It has already started inviting international firms planning to shift their operational base from China. These firms will be major job providers and in need of space for setting up their offices, factories, warehouses etc.

Report Analysis

As per a recent report on price correction prepared by us, via personal interviews with 133 developers from four prominent markets of Delhi NCR, MMR, Pune and Bengaluru the steep price cuts in the property prices seem like a far-fetched proposition. Property prices have already undergone required price correction before this, it has made the developers function on wafer-thin margins. Therefore, price correction at this time seems highly unfeasible.

Some categories which may get to witness a little price correction is high-end due to the accumulation of inventory. Developers can only do this if demands plunges.

In Mumbai Metropolitan Region (MMR), a possible correction up to 7.7%-14.2% is expected in the high end (above 2 CR) price brackets. While the affordable segment in MMR (INR 50 lacs- 2 CR) can witness a correction of around 3.9- 8.2%. In Pune & Bangalore corrections will be in the range of 0-5% and 1-3.5% respectively in the affordable and mid-income segments. In Delhi NCR, price corrections up to 3% might be visible in the affordable and mid-income segment Rs 30-90 lakh). In the larger price bracket, correction up to 7% might occur.

Developers offering discounts will be limited to slow-moving inventories. In such exceptional cases, developers will like to absorb losses with the major intent of turning around the inventory.

Price correction as a process is entirely based on empirical evidence, analysts and real estate experts closely studying the industry will be unhesitant in agreeing to the fact that buyers should utilize this golden opportunity of offers and deferred payment plans.

As looking at the market scenario, a hike is more likely expected in the coming months than a correction.

(The author is Founder & MD, 360 Realtors)

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