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Forum Newbie
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Last Login: 5/15/2008 2:13:39 AM
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Notwithstanding the much hyped boom, the overheated real estate market is already witnessing a slowdown. As the galloping realty run comes to an end and spiralling prices undergo correction, property buyers and investors find themselves at the crossroads. It is time to play safe and invest wisely in a cooling market. Realty Plus presents a handy guide for the real estate investors to make most of the turbulent times.
Long -term vs short- term investment In the overheated market, there have been times when one would invest in an apartment, pay the first installment and before the second installment was due, the prices would increase. But things have changed with the property slowdown and overnight gains are no more possible. In the current market experiencing slowdown, speculative activity that give a boost to short-term investments is getting diminished. The RBI restricting credit flow to real estate sector, speculative activity is likely to get diminished further. In such a scenario, short- term bull runs will stablise and returns in the long run become more attractive, similar to what happens in stock market.Short- term investment, adding that speculators have been pushed on their back foot as it will become difficult for them to service large holdings at a time when market prices are not rising.
Speculative capital gains will not be sufficient to cover interest costs. Thus the demand governed by investors, brokers etc is expected to see a downward trend. So from the investors’ point of view, those who are looking for organic returns rather than overnight ROR (Rate of Return) will find good opportunity in the present market. An investor in real estate cannot take on quarter-on-quarter or month-on-month look to book project. For example in White Field Bangalore around 1996-97 one could get land for about Rs 250 psf. Today it is not available for less than Rs 3000 psf. So there has been more than 10 times appreciation in price. With property slowdown, these prices may have taken to some extent but still there is a substantial gain. So, if you are buying property in a downturn market or in Real Estate in Cochin , invest in fundamentally good cities and properties on long- term basis as you can ride out any market dips and build up some equity with your monthly mortgage payments.
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