There is an uncanny similarity between the stock market and the real estate market today. Though the overall equity market is looking weak, there are several stocks worth investing right now. Similarly, though the broader real estate market is flat, action is happening at the micro level. There are several pockets across metros and large cities where property prices are reasonable and investors can expect good returns.
The introduction of the Real Estate Regulation Act helps buyers but has removed the information asymmetry that helped generate high returns from property. “Real estate, especially new launches, used to double in value in 3-4 years; that phase is now over. Property will now take up to 7-8 years to double in value”.
Second, the focus has shifted from premium properties to the affordable and mid-priced segments. Due diligence by home buyers has also improved. “Home buyers are taking time and doing in depth research like visiting property sites several times before buying”.
“Three main factors to check is the credible developer, right-sized house and good price. Unlike earlier, home buyers now insist that all three are in place,”
While credible builders are not able to charge crazy premiums now, mediocre builders are also not able to sell just by quoting lower prices.