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Impact Of Modi Sarkar On Real Estate

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Impact Of Modi Sarkar On Real Estate

Last updated: May 23 2014
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  • Impact Of Modi Sarkar On Real Estate

    Now that Modi sarkar is firmly in place for the next 5 years, what would be the likely impact on real estate prices in Mumbai?

    One possibility is that if the stock market rallies & the returns there are good, will investors shift their monies to the stock market for better returns given that the real estate prices are already quite high & are unlikely to give high returns. If investors shift monies will real estate prices drop?

    Second possibility is foreign real estate funds/investors might feel that India's economy/Modi's policies will lead to higher returns than other locations abroad. They will invest (and quite sizable funds) in real estate projects giving builders much needed cash. This will keep prices at high levels or maybe go up even higher.

    What do you feel...
  • #2

    #2

    Re : Impact Of Modi Sarkar On Real Estate

    In my view, the first thing Modi has to do is build infrastructure.. And what I mean by infrastructure is social infrastructure like roads, railways, for better connectivity. The moment he does that, the prices in Mumbai, which are extremely high because of poor connectivity issues, shall fall. Those in the far suburbs shall either increase or stabilize. That's exactly the strategy adopted by the BJP politicians like Lodha etc who have put their newer and larger projects in Dombivali, etc on the outskirts of Mumbai.

    Global investors are a bit wary after the HIRCO debacle where they lost all their money.. They shall tread carefully. So I do not see a big rush of money entering into the real estate market. There are already several PE investors (nearly multiple times of what money is currently lying on the sidelines) who want to remove their money from the Indian real estate market.

    The current stalemate in prices is only partially due to liquidity. The stalemate is more due to affordability and demand-supply gap. There are very few end customers who are buying at the current prices. Resale market too is dead. Also BJP isn't as corrupt as the NCP / Congress combine so prices shall only be stable or fall as the politicians of the parties who have lost shall remove their money and invest elsewhere..

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    • #3

      #3

      Re : Impact Of Modi Sarkar On Real Estate

      Here's one of the many articles I have based my view in the earlier post upon...

      A stable Modi sarkar! What's in store for the real estate sector - The Economic Times

      Of course the media is heavily funded by real estate through advertisement revenue (I have personally seen Hindustan times, TOI etc take flats from Lodha and other builders in return for advertisements), so they shall never ever talk about prices correcting or any news detrimental to the builder community... Its hard for the dogs in media to bite the real estate hand which feeds their mouths...

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      • #4

        #4

        Re : Impact Of Modi Sarkar On Real Estate

        Look at what happened historically where development has happened. Look at Ahmedabad - though prices are stable now for last 2 years but have risen drastically once development happened due to demand from people of city (end use and investment), investors and better infrastructure. Suburbs would see better rise due to better infrastructure but having said that town should also see steady return.

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        • #5

          #5

          Re : Impact Of Modi Sarkar On Real Estate

          Investors and speculators please open your eyes:

          If someone has seen the BJP manifesto, they will know that the RE prices will remain stagnated or decline as long as BJP is successful in its stated high growth, high infra and good governance agenda.

          Remember the high prices are artificial due to the fact that very few sectors/cities have good infra or transportation. For example look at DLF projects NTH and those on GC road, the reason for one selling for 4k psft and the other selling for 20k+ psft is because of the infra, jobs and urban facilities nearer to GC road.

          Under the new govt. amount of infra, roads, bullet trains, metro tracks, etc and other developments will result in a big blow to these artificial prices in a few pockets in urban areas.

          For people who are still in their dreams think a good govt will result in higher property prices, please see the price trends in Ahmedabad over the last 5 years.

          Also, do not forget the plans to start the 100 new cities project... it will suck up a lot of investor money and end user money.

          For people who think "100 new cities" is a day dream, please read about the GIFT city project in Gujarat. It is an international showcase city nearing completion in a matter of few years.

          Good governance, Better infra and low corruption always results in affordable home prices and reduces the demand-supply gap. See the example of real estate trends in Germany etc which are not land constrained but have good governance.

          Comment

          • #6

            #6

            Re : Impact Of Modi Sarkar On Real Estate

            I really wish property prices remain stagnant or correct so that middle class (including myself :-)) can afford them. But what about the huge money made by people in stock markets over last 6 months ? Also stock markets are expected to continue with bullish trend at least till budget is announced..
            Mumbai investors will plough this back into realty only I feel. Then prices won't correct, but will go up even further. With development, growth, higher GDP, higher disposable income, property will also go higher IMO.

            If you compare with highly developed cities of the world, property is not at all affordable there for ordinary middle class. Either they stay on rent in main city or have own house in distant suburbs and commute long distances. Although with good infra etc, the quality of life is not compromised, unlike in India now.
            I feel people have craze for Mumbai property like Indians have for Gold. When it goes down they will buy more and hold, till it stabilizes. When this is busted, maybe property rates will also correct.

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            • #7

              #7

              Re : Impact Of Modi Sarkar On Real Estate

              Yes i think my frnds here are mixing short, medium and long term. Though trend on long term would be rationalisation of prices which may lead to rise in some locations while being steady in some locations but in short and medium term price is expected to rise and that too little more in suburbs than town. New cities etc is a very long term game and should not have much effect right now.

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              • #8

                #8

                Re : Impact Of Modi Sarkar On Real Estate

                Originally posted by humble_guy View Post
                Investors and speculators please open your eyes:

                If someone has seen the BJP manifesto, they will know that the RE prices will remain stagnated or decline as long as BJP is successful in its stated high growth, high infra and good governance agenda.

                Remember the high prices are artificial due to the fact that very few sectors/cities have good infra or transportation. For example look at DLF projects NTH and those on GC road, the reason for one selling for 4k psft and the other selling for 20k+ psft is because of the infra, jobs and urban facilities nearer to GC road.

                Under the new govt. amount of infra, roads, bullet trains, metro tracks, etc and other developments will result in a big blow to these artificial prices in a few pockets in urban areas.

                For people who are still in their dreams think a good govt will result in higher property prices, please see the price trends in Ahmedabad over the last 5 years.

                Also, do not forget the plans to start the 100 new cities project... it will suck up a lot of investor money and end user money.

                For people who think "100 new cities" is a day dream, please read about the GIFT city project in Gujarat. It is an international showcase city nearing completion in a matter of few years.

                Good governance, Better infra and low corruption always results in affordable home prices and reduces the demand-supply gap. See the example of real estate trends in Germany etc which are not land constrained but have good governance.
                In addition, the NCP/Cong is definitely set to loose in upcoming assembly elections in 6 months. Many of the realtors in Maharashtra, especially in Pune are NCP backed. Plus, one more round of election spending in Maharashtra. We are definitely in for correction.

                And the most important thing - regardless of the political impact, affordability is the most important factor which is clearly not in realtors favor.

                Comment

                • #9

                  #9

                  Re : Impact Of Modi Sarkar On Real Estate

                  Will real estate correct, or will it rise, it seems to depend on whom you speak to. It also seem to depend your involvement with it. Some people want the prices to correct so that they can purchase a home, some like me wanted to upgrade to a better home, yet again there are other that are invested in the RE market and would like the see returns on their investment, and would like the market to continue its appreciation, because we live in the information age and are bombarded information from all sides, the person who want to buy a home tends to be biased and partial towards data and information trends, that supports his hope and desires that RE will correct, and a person who is invested in RE similarly collects data and informative trends that supported his desire/ hope for RE appreciation. I myself waited 4 years for the Mumbai market to correct,(read Andheri/Oshiwara west area) before deciding to invest in Pune (under construction) for end use. Reason i just couldn't handle the stress of waiting.
                  The Ground realities of RE are truly Baffling!

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                  • #10

                    #10

                    Re : Impact Of Modi Sarkar On Real Estate

                    Originally posted by humble_guy View Post
                    Investors and speculators please open your eyes:

                    If someone has seen the BJP manifesto, they will know that the RE prices will remain stagnated or decline as long as BJP is successful in its stated high growth, high infra and good governance agenda.

                    Remember the high prices are artificial due to the fact that very few sectors/cities have good infra or transportation. For example look at DLF projects NTH and those on GC road, the reason for one selling for 4k psft and the other selling for 20k+ psft is because of the infra, jobs and urban facilities nearer to GC road.

                    Under the new govt. amount of infra, roads, bullet trains, metro tracks, etc and other developments will result in a big blow to these artificial prices in a few pockets in urban areas.

                    For people who are still in their dreams think a good govt will result in higher property prices, please see the price trends in Ahmedabad over the last 5 years.

                    Also, do not forget the plans to start the 100 new cities project... it will suck up a lot of investor money and end user money.

                    For people who think "100 new cities" is a day dream, please read about the GIFT city project in Gujarat. It is an international showcase city nearing completion in a matter of few years.

                    Good governance, Better infra and low corruption always results in affordable home prices and reduces the demand-supply gap. See the example of real estate trends in Germany etc which are not land constrained but have good governance.
                    everybody has there own set of examples...BTW what are the prices in GIFT city and who is building this tower....

                    Comment

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