Who will benefit good returns from the current real estate market? Is it conducive to end-users or investors?
The realty market is influenced by the activity of the end-users and the investors both, but there are times when one has a greater influence on the market in comparison to the other.
The investor’s property is meant for the end-users eventually; therefore, the demand from consumers is usually constant. In the prevailing market condition, the return from real estate investment is subdued in comparison to what it was a few years ago; therefore, the end-users are in a commanding position in the current market.
Surabhi Arora, senior associate director, research, Colliers India says, “There are always captive investors who keep on investing in real estate; however, currently, the residential market is primarily end-user-driven. The demand is primarily in the mid-range and the affordable segment and people’s preference is tilted towards ready-to-move-in projects for end-use.”
Arora further adds, “For an end-user, the timing is most opportune due to the availability of a number of options and attractive finance schemes. Developers are valuing immediate cash flows as margins are shrinking due to the holding costs such as financing cost and escalating construction labour costs.”
Experts believe that the real estate industry currently, is a buyer’s market and they have seen more and more consumers making purchases compared to the investors. Thus, with affordability being the main factor due to the ever-increasing rates of Mumbai’s real estate market, users are commanding the market.
An opportune time for end-users?
“Due to the rate cuts and the current market scenario, this is the best time for buyers to get the best deals and thus, an end-user will not face any drawbacks in the prevailing situation. In terms of the benefits, buyers will be able to crack a better deal with developers and ask for a good discount on the price offered by the developer. Also, they would get an attractive payment plan for different projects, which is again beneficial for end-users. With developers also wanting to sell to actual buyers, the end-user can actually get a steal deal as of today. On the other hand, there are projects specifically targeted towards end-users only,” suggests Rohan Agarwal, managing director, Geopreneur Group.
For an investor who is looking at entering into the project at the time of the launch and exiting around completion, the current real estate scenario may not be apt because:
The taxes have hit an all-time high; Property rate cuts have been acted upon and not much appreciation appraisal is expected in the near future; There is already a huge investor stock present in the market and it has not been picked up yet.
Some experts also believe that real estate is always a profitable deal, especially for investors who buy a property and create a long term investment plan. Doing so, even during a dull market scenario, will yield rents and in the long run, the investor will always get more than what he has invested.
Bigger opportunities ahead for Mumbai’s end-users:
“In markets such as Mumbai and the Mumbai Metropolitan Region (MMR) with a population density of 37,000 per square km, there is always a latent demand for properties, especially in the affordable and mid-tier segments. Peripheral markets have fuelled the MMR’s growth in the first half of 2016 with mid-segment and affordable homes driving the purchase activity in the peripheral, central and western suburbs, Thane and Navi Mumbai,” points out Shubika Bilkha, business head, The Real Estate Management Institute (REMI).
Experts explain that the key drivers for the sector in 2016 are rationalised interest rates and a boost in the employment scenario due to an increase in office absorption. Besides this, the clearance of the regulatory bill has provided the much needed boost to the buyer sentiments.
The capital values across locations shall remain stable due to the huge inventory in the pipeline while selective mature locations with good infrastructure will continue to demand a premium.
Why are end-users commanding Mumbai’s realty market?
Property rates are attractive for end-users and they are not vulnerable to a further price fall; Festive discounts and offers to attract the consumers are more in comparison to the investors and in abundance; Banks have further reduced the interest rate; therefore, home loans would be cheaper for the end-users; Increased inventory with builders can put pressure on the investor’s holding; however, it will open up more opportunities for the end-users.
201, Prestige Precinct, Near Nitin Casting,
Almeida Road, Panchpakhadi
Thane West – 400604