Ahmedabad is among the 11 cities where the Reserve Bank of India intends to develop one index specifically for commercial properties and another for residential properties. This initiative aims to mitigate speculations and address anticipated challenges associated with a potential realty bubble burst in the forthcoming years. The RBI's report concerning the asset price monitoring system (ASMS) recommended this development two months ago.
Several countries, including Canada, France, and the United States, utilize similar indices to monitor realty prices.
The report emphasizes that the RBI should initiate the compilation of a realty index and provide updates on a quarterly basis. To start, Mumbai and Delhi have been identified, where property prices have surged to unprecedented levels. Subsequently, the RBI plans to include an additional ten cities, which will encompass Greater Chandigarh, Hyderabad, Chennai, Bhubaneswar, Pune, Jaipur, Kolkata, Lucknow, Bangalore, and Bhopal.
Once established, the real estate price index will serve as a fundamental reference for investors to assess the performance of companies listed in the real estate sector. This index will also assist investors in comparing real estate against stocks and bonds. Furthermore, it promises to shed light on the associated risks of specific investments and the potential returns that may be garnered.
The ASMS report has outlined the inadequacies that this new index would aim to address.