The real estate game…

Buy land, they’re not making it anymore.

  • Mark Twain

Land/real estate adjusted for inflation has just given a 0.5% return in the last century in the US markets. Also, the maximum return/increase in real estate prices was observed during the Post 2nd world war era when there was a genuine spurt in demand for housing by the War-returned soldiers. So, if you are investing in real estate at the wrong timing, you may fail to see any appreciation at all for all your life.

Real estate in India is too see a radical change in the next few decades. While, the demographic dividend and the young population is likely to play on the demand side, the supply side is equally buoyant helped by  SEZs planned and Malls percolating to the tier-2 and tier 3 cities. With the integration of economies (rural & urban), development of infrastructure (Highways reducing time to commute) and increasing digitalization, demand led growth in the metros is likely to be low as compared to that in the non-metro cities. The initial leg of growth in real estate has been fuelled by the IT boom with IT hubs like Bangalore, Hyderabad, Pune and Gurgaon. Further growth is likely to be centered in areas of Manufacturing and Consumption. Cities like Nashik, Indore, Vizag, Ludhiana, Lucknow and Nagpur are likely to do well in the near future.

The buoyancy in the Indian real estate is also likely to come out of setting up of real estate Mutual funds which may be in place in the next 12-24 months. The Real estate related financial instruments are to create an artificial demand (investment relate demand).  

One thought on “The real estate game…

  1. The global economic meltdown has taken its toll on almost all the industries across the globe. Developing countries like India badly suffered in the wake of inflation and recession. Business, that was coming in from the developed countries particularly in the field of IT dropped down drastically triggering off a series of reactions in related industries. Along with business travelers, the number of leisure tourists also dwindled partly because of the sagging economy and partly because of the horrifying attacks of 26/11 in Mumbai. Places of cultural and historical importance like Vishakhapatnam that tourists used to frequent, saw a crucial drop in the number of leisure travelers recently and the occupancy rate of the hotels also went down. Even the start up hotels in Vishakhapatnam, in spite of lowering their rates are witnessing a low occupancy rate. The occupancy rate of the budget hotels in Vishakhapatnam as with the rest of the country has seen as high as a 30% fall in the occupancy rates. Known as the “Jewel of the East Coast” Vishakhapatnam is a very important industrial hub apart from being a tourist destination. In addition, it is very well connected to the capital of Andhra Pradesh, Hyderabad which is one of fastest growing IT hubs of the country. It is only natural therefore that there are quite a many top class business hotels in Vishakhapatnam. However, the current economic condition has changed the complete scenario and has affected the hospitality industry also.

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