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Bright prospects for India realty
Issac John / 17 June 2011
DUBAI — India’s fast growing real estate sector offers attractive investment opportunity for non resident investors, but buyers should exercise a great degree of vigilance while taking the buy decision and selecting the projects, Maharashtra Chamber of Housing Industry, or MCHI cautioned on Thursday.
“The decision to buy property in India is usually easy because it connects one to their roots. Powered by a booming economy India provides great investment opportunities. But flashing lights and fireworks aside, one has to really think about everything carefully and be well informed when buying property in India,” said Paras Gundecha, President of MCHI, India’s prominent body of developers who have been organising the shows in the Gulf to cater to the ever increasing demand for Indian real estate by NRIs.
“MCHI through their exhibitions offers the MCHI ‘Seal of Approval’ during their property show, so that NRIs are assured of the fact that all properties on offer are assured by the developer to be legally clear, and MCHI stands with the NRI buyer as regards to this promise made by the developer. This ‘Seal of Approval’ makes all the difference to an NRI looking at making the ‘buy’ decision,” he said in a statement emailed to Khaleej Times on Thursday.
Boman Irani, Secretary of MCHI, said prices have been stable over the last year and half. “This makes it a win-win scenario for those who wish to purchase a house here. For those who had invested earlier will see a continuous growth in their investments – over the next few years. In Mumbai Metropolitan Region, or MMR, areas like Thane, Navi Mumbai, Mira – Bhayandar, Vasai – Virar + Boisar as also Kalyan – Badlapur and Karjat will see large returns for investors. These are rapidly developing hubs for Mumbai”
Irani said Dubai is a key NRI market for Indian Realty. “MCHI official exhibitions organised with participation from their members who follow strict Code of Conduct imposed by the Association assures the NRI that the developers keep up their commitment. It is important for a buyer to be clear about the investment for home purchase. For this the full transparency offered by MCHI exhibitors makes it a preferred home buying destination.”
Formed in 1982, MCHI is the only recognised body of real estate developers in Mumbai and MMR.
Property analysts said property prices in India are hitting resistance levels, after doubling in the past five years. While some of the analysts predict a market correction other forecast that housing prices may rise by 5-10 per cent in the next three to six months as the cost of funds for developers is expected to increase following the Reserve Bank of India’s decision to raise key policy rates by 25 basis points.
“Property prices are bound to go up in next 3-6 months by 5-10 per cent across the country,” Confederation of Real Estate Developers’ Associations of India, CREDAI, Chairman Pradeep Jain was quoted by a news agency as saying on Thursday. Jain said the hike in repo and reverse repo rates would result in an increase in interest rates for builders and the same would be passed on to home buyers.
Demand would not be hit despite the expected rise in interest rates on home loans. “People will continue to buy knowing that housing prices would go up further,” he said.
In the last quarter of fiscal 2010-11, India’s largest realtor, DLF, reported a 20 per cent drop in fourth quarter sales, while the second largest developer, Unitech, saw an even bigger 45 per cent decline in the same period. In big cities such as Mumbai, Delhi and Bangalore, about 12 per cent of new residential units went unsold in the first quarter of this year. According to analysts, the steeply-climbing property prices are to blame.
According to Professor Amit Kapoor at the Management Development Institute, the prices of property have gone up 1,000 times in the last 30 years. “What is the rationale for this kind of price increase? What we need to do here is the biggest land holder in the country, the government, needs to release more land. The moment you have more land, supply sides constraints will go away and prices will come down.” — firstname.lastname@example.org
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