Last four weeks have been quite busy , first of all i was getting my feet in settling down again in Chennai, which meant i had to do lot of administrative work to ensure a smooth settlement . There were scores of things that had to be completed both for my wife and me. Right from getting new phone & Internet connection to ensuring that all necessary documentation had right addresses and contact numbers.
Apart from this , i was also adjusting to 4 hours of commute to office every day. I travel by my office bus every day. The bus jostles around the early morning & evening traffic, during the mornings as the mist lifts off some parts of the journey is actually very pleasant.
This blog is not about my bus journey but more about what has caught my eye in the last few weeks.
When i board my bus , within a span of few hundred meters there are 3 new construction projects , each of which in their phase 1 would have no less than 150 flats and these are premium flats ( or at least premium in my area ) . Last week while i was traveling via public transport to Nungambakkam i couldn't believe what i saw . There were scores of real estate projects which cumulatively should have had about 000's of flats being built or almost ready to be completed.
Last morning i opened the news paper, more than the actual news, the paper was full of new real estate project launches for republic day and the associated discounts. In the evening i watched a property show in one of the major business news channel, i couldn't comprehend the prices that were being quoted , the range for good flat seem to be between Rs 80 (8 Million ) Lakhs to Rs 8 Crores (80 Million Rs). My jaw dropped hearing these prices & i was astonished to say the least.
The combination of the prices and the amount of inventory that has already been built and slew of new projects that have already been or are being launched every week defies logic. Recent research points to the fact that property prices (house hold) will increase in 2013. Despite this research & high interest rate in the country, players in this market believe that this is the right time to buy a property.
While there is a lot of inventory being built up , am not so sure who the buyers are? The news is that the appetite for buying in real estate is not abating. What is driving this crazy high prices? i cannot make any sense of this. Am scratching my head to understand that . Incidentally last night i heard through unofficial sources that that there is a new property project due to launched in my street and 50% of the project has already been booked !!!!!!! , quite unbelievable.
On one hand business are complaining about high interest rate which is making customers to spend very little if they do spend anything at all but on the other we seem to be having scores of new launches of properties. Interestingly enough, there has been no major discounts from any of the real estate players , there is no rush to sell-off inventory, which is an interesting conundrum.
Builders do not want to budge as they expect the Reserve Bank of India to cut rates which will make credit more cheaper , which in turn will get the buyers back to the market, will real estate property prices keep going up and up ? only time will tell, however
There is an old adage - What goes up , has to come down . The higher it rises, the bigger it will fall.
This space would be very interesting to watch!
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