Value Buying
The real estate market has generally been regarded as one of India's most significant wealth creators over an extended period. Individuals and entities that have strategically invested in properties or real estate shares have realized substantial returns on their investments. Properties acquired in prime areas of major cities for a few lakhs have since appreciated to several crores, exhibiting an impressive annual growth rate of 25-26 percent.
After a period of considerable property value appreciation, spanning nearly a decade and a half, real estate prices have stabilized. The market is currently facing the headwinds of economic deceleration, elevated interest rates, and the implementation of new financing regulations by the Reserve Bank of India (RBI). Market liquidity is diminishing, leading to price corrections of 10-15 percent in certain property hotspots that recently reached their peak values. There is a perception that the real estate market's period of rapid growth has temporarily ended, resulting in a more gradual pace as it seeks equilibrium.
Currently, the property market operates under stricter conditions than many believe. A price decline in major cities does not invariably translate to a similar decrease in other markets. Demand is expected to resurface when prices align with the prevailing market conditions.
However, the noteworthy surge in property values warrants a degree of market correction. Discovering residential properties priced at ₹3,000 per square foot in Delhi-NCR could present a favorable opportunity for long-term investment prospects. Given the ongoing growth exhibited in various regions throughout the country, prospective investors may find it advantageous to investigate opportunities in smaller towns.
Investors should exercise both prudence and discernment when making investment choices, as not all property acquisitions yield substantial profits, particularly outside of periods of rapid market expansion.
Currently, land owners are becoming increasingly eager to sell after a prolonged period of stagnation lasting two to three years. Developers are encountering challenges in meeting the demands of these land owners, which has led to reduced land values and greater availability. This trend may potentially decrease property costs and enhance affordability in the foreseeable future.
Selecting suitable properties in a volatile market is a formidable undertaking, necessitating comprehensive research, strong conviction, and considerable patience. Investors sometimes disregard liquidity risks inherent in real estate, leading to over-investment. Investment in unsuitable locations may result in extended periods before yielding satisfactory outcomes.