Many British citizens have properties to sell in India, and this article seeks to inform them about what to expect with respect to the real estate scenario in the country. Unfortunately, it does that real estate in India is headed for a major slump. This has been brought about for several reasons – a pile-up of inventory, late deliveries and a strong action taken by the government against unaccounted for wealth, known as “black money”.
Real estate developers in India are notorious making late deliveries, which sometimes beats the so-called deadlines by over two years. A report by the Mumbai based Ambit Capital suggests that there is no hope as yet for a quick recovery in real estate in many cities in India, and as a matter of fact, further correction in prices is only to be expected.
Some of the data is quite startling – property prices in India have fallen by as much as 25% over the last year in almost all cities, large and small. Even the best localities in New Delhi have witnessed a 25% correction.
Prices in Greater Noida have fallen by 18%, in Mahalaxmi, Mumbai by 12%, in Dwarka, New Delhi by 10%, in Hazratganj in Lucknow by 4% and Nipana in Indore by 5%. What is quite clear is that there has been a uniform drop in almost all cities in the country.
Transaction volumes have dropped by 10 to 15% in most property markets in the country. It is not unusual, for example to witness deserted scenes in property registration offices across the country. Rental numbers have remained largely the same over the years and buying and selling of properties has been on the decline.
New property launches have dropped alarmingly. While over 20,000 new units were launched in New Delhi in 2014, this year, there have been just 3500 new launches. In Mumbai, there have been 8900 new launches this year compared to over 21,000 last year. In fact, there is 71 months of inventory piled up in New Delhi, 36 months in Chennai and over 46 months in Mumbai. A healthy market should have just 8-12 months of inventory.
Why has there been such a slowdown in real estate in India? There are several reasons for this. The high interest rates have kept many buyers away, so even though the real estate prices have corrected, the interest rates remain as high as ever – which discourages people from buying property.
Investors have become very reluctant about buying property in the country as property prices have been in a decline. The lending squeeze by banks has badly affected sales of commercial properties. The rental yields on Indian properties are also much lesser than that seen in other Asian countries.
Also, because of the cut down on corruption, there is less money to fly around. There are fewer buyers with cash to burn. It has been estimated that over 30% of the money in Indian real estate is funded by money made by some people from corruption. So if corruption stops, while that may be great news for an average citizen, that’s not good news for you if you have houses to sell in India, because that will only lead to a decline in prices.
You should sell property in India at the earliest, before the situation gets any worse. That’s why it is important to have UK’s best estate agents by your side, especially one that has excellent relationships with local Indian real estate brokers, which will allow you to get sell your house in India at the earliest.