by Anuj Puri, Chairman & Country Head, Jones Lang Lasalle Meghraj:
In India, as in other parts of the world, the vigour of the economy is mirrored in the demand for and prices of real estate. Reserve bank of India has estimated that the real estate sector represents approximately 5% of GDP, being the second largest employer in the nation. Real estate can thus provide a glimpse into the marketability of a state.
To my reckoning, Maharashtra represents in this regard a unique market model – it is an amalgam of high business and, as a result, intense residential and commercial real estate activity. In fact, its operative trends are so firmly entrenched that we have not witnessed any significant slackening in overall activity despite the economic pressures affecting many other Indian states. However, there is no denying that there has been an impact. The cities of Mumbai, Pune and Nasik would serve as suitable illustrators for the current scenario.
In Mumbai, affordable housing has become an elusive dream. Skyrocketing rate appreciation brought on by the continuing demand-supply mismatch has boosted residential home prices almost completely out of the reach of the common man. It is definitely not an investor's market right now, owing to the generalized slowdown. Prices are stagnating and there may be a correction in certain locations over the next twelve months. Of course, factors like specific location sector and property typology will play a role. End users are advised to study property trends before buying a home for genuine self-use. It is possible that the area they have chosen to buy into may see a drop in rates over the next six months to a year. Meanwhile, Navi Mumbai – the new growth sector – offers options both for those seeking affordable homes and those who seek investment opportunities.
Pune benefited for a considerable period from Mumbai’s unrealistic. The recession in the American markets has weakened the commercial and residential markets. The slump in the stock market has caused investors to start moving out. Second home buyers are keeping away and end users are cautious in their buying, awaiting price corrections. Despite the generalized slowdown, developers continue to have holding capacity and there continues to be demand for mid-segment homes, 80% of which is Pune is driven by software professionals and recently relocated manufacturing sector executives. The highest demand is in and around Hinjewadi, Kharadi, Magarpatta, in and around SP Infocity and in and around Phursungi and Hadapsar.
Nasik, whose residential market grew at a rather leisurely pace until about 2006, suddenly began showing significant annual appreciation rates from the beginning of last year. Nasik had begun emerging as a realistic alternative destination for buyers who were discouraged by Mumbai and Pune’s high rates. It offered low entry costs and, at the same time, reasonably attractive appreciation rates. Another reason was the increasing presence of the IT/ITES sector there. In recent times, Nasik has been witnessing rather healthy appreciation rates; because of its relatively late entry into the real estate stakes, it was insulated from the regressive dynamics currently prevalent in the rest of Maharashtra.
Despite the slowdown, Maharashtra remains one of the foremost contenders in the real estate sweepstakes. All sectors – residential, commercial, retail, industrial and hospitality –continue to show an upward curve in the long term.
In India, as in other parts of the world, the vigour of the economy is mirrored in the demand for and prices of real estate. Reserve bank of India has estimated that the real estate sector represents approximately 5% of GDP, being the second largest employer in the nation. Real estate can thus provide a glimpse into the marketability of a state.
To my reckoning, Maharashtra represents in this regard a unique market model – it is an amalgam of high business and, as a result, intense residential and commercial real estate activity. In fact, its operative trends are so firmly entrenched that we have not witnessed any significant slackening in overall activity despite the economic pressures affecting many other Indian states. However, there is no denying that there has been an impact. The cities of Mumbai, Pune and Nasik would serve as suitable illustrators for the current scenario.
In Mumbai, affordable housing has become an elusive dream. Skyrocketing rate appreciation brought on by the continuing demand-supply mismatch has boosted residential home prices almost completely out of the reach of the common man. It is definitely not an investor's market right now, owing to the generalized slowdown. Prices are stagnating and there may be a correction in certain locations over the next twelve months. Of course, factors like specific location sector and property typology will play a role. End users are advised to study property trends before buying a home for genuine self-use. It is possible that the area they have chosen to buy into may see a drop in rates over the next six months to a year. Meanwhile, Navi Mumbai – the new growth sector – offers options both for those seeking affordable homes and those who seek investment opportunities.
Pune benefited for a considerable period from Mumbai’s unrealistic. The recession in the American markets has weakened the commercial and residential markets. The slump in the stock market has caused investors to start moving out. Second home buyers are keeping away and end users are cautious in their buying, awaiting price corrections. Despite the generalized slowdown, developers continue to have holding capacity and there continues to be demand for mid-segment homes, 80% of which is Pune is driven by software professionals and recently relocated manufacturing sector executives. The highest demand is in and around Hinjewadi, Kharadi, Magarpatta, in and around SP Infocity and in and around Phursungi and Hadapsar.
Nasik, whose residential market grew at a rather leisurely pace until about 2006, suddenly began showing significant annual appreciation rates from the beginning of last year. Nasik had begun emerging as a realistic alternative destination for buyers who were discouraged by Mumbai and Pune’s high rates. It offered low entry costs and, at the same time, reasonably attractive appreciation rates. Another reason was the increasing presence of the IT/ITES sector there. In recent times, Nasik has been witnessing rather healthy appreciation rates; because of its relatively late entry into the real estate stakes, it was insulated from the regressive dynamics currently prevalent in the rest of Maharashtra.
Despite the slowdown, Maharashtra remains one of the foremost contenders in the real estate sweepstakes. All sectors – residential, commercial, retail, industrial and hospitality –continue to show an upward curve in the long term.
