Real Estate 2012 - Risks and Opportunities

With the dawn of the New Year, home buyers will be wondering how the year 2012 will be for them. Makaan.com feels there are better opportunities in store for home buyers in 2012. Property prices in 2012 are likely to remain range bound and interest rates are likely to roll down from the second quarter of the year. Though there are positive signs for home buyers, beware of these risks and choose the best. 

Risks

Investing in a new project:  Investing in a new project without proper due-diligence, can be counter productive. Given the tight liquidity with the developers, it will be advisable to invest only in homes that are 60-80% complete or are read to move in. 70% of all projects that were launched during 2007-08 and were to be handed over in 2011 are running behind schedule. New projects launched in 2012 can meet the same fate if the credential of the developers and their ability to fulfill their commitment is not property tested.

Land Acquisition Bill: If the new land acquisition bill get passed in the current form, property prices across the country may go up. The current bill proposes to give higher compensation to the land owners and provisions for their re-habitation. This will come at a cost which will have to be borne by the home buyers. The bill otherwise has good grievance redresser provisions for the home buyer.    

Opportunities

Two broad themes that is likely to emerge in 2012, that the home buyers should keep a check

Rental housing: Rental Housing essentially means that the project (or part of it) will not be sold, but will be offered in the market exclusively for rental purpose. Rental housing is a relatively new term for the Indian real estate sector but an extremely popular concept in the west. With the migratory population in Indian metros rising, it is widely believed that there is a latent demand for rental housing (especially in the tier A cities). We believe developers will start changing their product offering to match this demand in 2012. 

Walk to work or mixed use development: People in metros are tired of wasting 2-3 hours every day in just commuting to work. This is disturbing the work-life balance among most working call and is leading to stress. Government and Developers has identified this as a potential gap that can be bridged by offering mixed use urban development. This will ensure that commercial workplace coexist with residential unites so that walk to work can become a realty in the Indian context.