There is a rampant fear of a bubble being d
eveloped in realty. Residential prices across all the Tier 1 cities have nose-dived by 20-25% over the last couple of months. So is this supposedly evergreen sector now facing a downturn? Dr. Tobias Just explains, “We don’t see a countrywide speculative bubble; rapidly growing markets are prone to temporary overheating. Relatively low liquidity of real estate and high mobility of investor capital are important ingredients for developing asset bubbles.” However, at the moment, prices have gone down, so what’s the prime reason? Ankur Srivastava explains, “Home loan rates have risen by almost 150-200 bps in the past nine months, making home loans costlier. Also, as the under-construction projects near completion, speculators shall be faced with increased pressure to pay remaining instalments on the residential properties purchased by them.” Despite the recent developments, trade pundits are very upbeat about the sector, especially on the office space frontier. Prices in future in all probability are going to shoot up. This is surely not the end of real estate boom; it is just the beginning...
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eveloped in realty. Residential prices across all the Tier 1 cities have nose-dived by 20-25% over the last couple of months. So is this supposedly evergreen sector now facing a downturn? Dr. Tobias Just explains, “We don’t see a countrywide speculative bubble; rapidly growing markets are prone to temporary overheating. Relatively low liquidity of real estate and high mobility of investor capital are important ingredients for developing asset bubbles.” However, at the moment, prices have gone down, so what’s the prime reason? Ankur Srivastava explains, “Home loan rates have risen by almost 150-200 bps in the past nine months, making home loans costlier. Also, as the under-construction projects near completion, speculators shall be faced with increased pressure to pay remaining instalments on the residential properties purchased by them.” Despite the recent developments, trade pundits are very upbeat about the sector, especially on the office space frontier. Prices in future in all probability are going to shoot up. This is surely not the end of real estate boom; it is just the beginning...For Complete IIPM – Editorial , Please Click on IIPM-Editorial Link
Source:- IIPM-B&E , Initiative:- Prof. Arindam Chaudhuri - 2006
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