Kolkata

Buying residential property now would be a wise decision because of several indications that say property prices are all set to move up. With India’s economic resurgence under way to the tune of nine percent, the real estate market has also begun to stabilise. The residential segment particularly is picking up fast.

Compared to the period post the global slowdown, there has been remarkable recovery for the residential realty sector till date. The commercial segment too is reviving though it may take longer than the residential one, although the process has already started — especially in cities like Bangalore, where the revival of the IT sector has had a considerable impact on commercial real estate.

The prices of projects, too, have begun to move northwards, indicating the speedy recovery of the industry. There are various factors that are contributing to further rise in the prices. With price escalation of land coupled with increasing cost of construction material and labour, we foresee a steep rise in price inevitable for real estate properties across the country.

One of the major concern areas in this context today is the acute shortage of construction labour in the country, which is leading to delays in project delivery and thus escalating project costs. The labour shortage, which the construction industry is already facing, is currently estimated between 30 to 40 per cent across the country. With the slowed down pace due to shortage of skilled and semi-skilled labourers further on the rise, Confederation of Real Estate Developers’ Associations of India (CREDAI) fears a steep rise in project cost and it foresees a hike to the tune of 15 percent nationally.

Also the economic growth of the country has resulted in generation of fresh employment especially in the service sector, which in turn has catalysed a significant demand in the market. While earlier, the people were keener on buying houses post retirement, today it is the younger generation that is driving the real estate growth in the country. With easy availability of finance and growing income stability, young couples in the age group of 25-35 years are finding it more and more suitable to own a house. This increasing demand definitely leads to price rises depending on the market dynamics and supply scenario.

Looking at the present trends and observing the same in the last few years, it looks imminent that input costs for construction of projects will only increase in the future. And with the growing population, economic prosperity, increased income levels and large scale migration to urban cities, the demand for housing too will become major point of concern.

As it is, The Eleventh Five Year plan has estimated the urban housing shortage alone to be of 24.7 million units, which seems to be a crucial issue at the moment. Hence, with the demand growing in the real estate market we observe that price will only shoot up further over time. Keeping all these factors in mind, we would consider the current phase as the most appropriate time to invest in real estate. Since prices are expected to climb only higher henceforth, it would also be profitable for those purchasing property today as the current valuations are slated to rise in the coming years.

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