Current Market Scenario by Anuj Puri

Anuj Puri, Chairman & Country Head, Jones Lang Lasalle Meghraj:

There has been a moderate-to-mid slowdown overall. Retail investments have shown a sharper decline than institutional investments.

Financial institutions are finding it attractive to enter projects at reasonable valuations in the current market situation. Retail investors in residential property probably need to wait and watch till after Diwali to get good value.

Mumbai, Delhi NCR and Pune would have been the best investment options three years ago. The returns were about 30% p.a. Despite the current slowdown, returns are likely to be between 20–30% if an investor holds on for the long term. In the short-to-medium term, they will be considerably lower.

Provided that one does not pay excessively for a property, and further provided that one holds it for a sufficiently long period, thereafter exiting at the right time, returns will be the same. Only the time-frame for these returns has changed – not the potential. It is now a matter of holding power and investor maturity.

Short-term investment would yield much lower returns. To illustrate:

Delhi / NCR- Residential: 7-8%, Commercial: 11-13%
Mumbai - Residential: 7-9%, Commercial: 11-13%
Bangalore - Residential: 6-8%, Commercial: 11.5-13.5%
Kolkata - Residential: 6-8%, Commercial: 11-12%
Chennai - Residential: 6-8%, Commercial: 11.5-13.5%
Chandigarh (incl. Mohali, Panchkula, Zirakpur) - Residential: 6-8%, Commercial: 12-14%
Indore - Residential: 7-8%, Commercial: 12-14%
Cochin - Residential: 5-7%, Commercial: 12-13%

These figures are a reflection of rising property prices and increased risk. Expected returns are higher in riskier markets.

Contributed By : Arun Chitnis