Real Estate Investment in Mumbai - Poised to Constitute Large Chunk of Investors’ Portfolio
Mumbai has been one the highest returns-yielding property markets in India, through the years. There are many factors that suggest that real estate prices in Mumbai will be further on the up, and real estate investment in Mumbai is poised to take up a larger chunk in investors' overall portfolios.
The following are some of the facts that suggest that property investment in Mumbai will be on the up:
1)Even where other cities have shown stagnancy, Mumbai's property market has held its own: Mumbai's consistent property price rise trend remained unchanged in Fiscal Year 2013-14. Even with the last quarter, which saw property sales across the country being overall quite stagnant because of factors like the uncertainty of the results of the elections and a consequent slowing down of construction projects due to diminished funds, property prices in Mumbai defied the odds and showed a rise. Once elections come to a close, there is expected to be a further rise in demand, and real estate investment in Mumbai and across metros will get a further push.
2)The city's property price rise has pretty much been across localities and across market segments: Even as supply of new residential projects in Mumbai have been quite high, demand for apartments in these new multi-storey buildings have also remained very high. With the close of the elections, many of the new residential projects in Mumbai will be poised for handing over possession, and are likely to subsequently sell unsold flats to segments looking for ready-to-move-into flats. Again, in the last quarter of FY 2013-14, studies conducted by India's leading property portal Magicbricks, indicate that 85% of all localities of the study recorded an increase in price values, and over 50% of the localities registered a rise in rental values.
3)SEBI's draft Real Estate Investment Trust (REIT) regulations will likely encourage investment in real estate as an asset class: The introduction of REITs comes in quick succession to the Real Estate Regulation Bill introduced earlier in 2013. It is expected that these regulations will regularise India's real estate sector, and encourage transparency and liquidity in the market, which will push demand higher up.
4)Costs Have Increased, Keeping Prices Up: In the last two years itself, construction costs have increased by an approximate, whopping 40%. While this has meant lower margins of profits increased by 40%. While this means lower profit margins for builders' under-construction, new residential projects in Mumbai and across cities, it has contributed to keeping property prices high. Additionally, an increase in government taxes and premiums has contributed towards keeping property prices up.
In summation, there is every evidence to suggest that Mumbai's real estate sector is going to remain a very attractive option for long and medium term investors in the years to come. Beyond just Mumbai and some other promising metros, with faster growth expected in Tier II cities, these will also attract more medium term investors. Greater clarity and an action on certain proposed measures can be expected post the 2014 elections, after which the market across board will likely see a further increase in property prices.
To know more about options for property investment in Mumbai, please visit: http://www.raunakgroup.com/
The following are some of the facts that suggest that property investment in Mumbai will be on the up:
1)Even where other cities have shown stagnancy, Mumbai's property market has held its own: Mumbai's consistent property price rise trend remained unchanged in Fiscal Year 2013-14. Even with the last quarter, which saw property sales across the country being overall quite stagnant because of factors like the uncertainty of the results of the elections and a consequent slowing down of construction projects due to diminished funds, property prices in Mumbai defied the odds and showed a rise. Once elections come to a close, there is expected to be a further rise in demand, and real estate investment in Mumbai and across metros will get a further push.
2)The city's property price rise has pretty much been across localities and across market segments: Even as supply of new residential projects in Mumbai have been quite high, demand for apartments in these new multi-storey buildings have also remained very high. With the close of the elections, many of the new residential projects in Mumbai will be poised for handing over possession, and are likely to subsequently sell unsold flats to segments looking for ready-to-move-into flats. Again, in the last quarter of FY 2013-14, studies conducted by India's leading property portal Magicbricks, indicate that 85% of all localities of the study recorded an increase in price values, and over 50% of the localities registered a rise in rental values.
3)SEBI's draft Real Estate Investment Trust (REIT) regulations will likely encourage investment in real estate as an asset class: The introduction of REITs comes in quick succession to the Real Estate Regulation Bill introduced earlier in 2013. It is expected that these regulations will regularise India's real estate sector, and encourage transparency and liquidity in the market, which will push demand higher up.
4)Costs Have Increased, Keeping Prices Up: In the last two years itself, construction costs have increased by an approximate, whopping 40%. While this has meant lower margins of profits increased by 40%. While this means lower profit margins for builders' under-construction, new residential projects in Mumbai and across cities, it has contributed to keeping property prices high. Additionally, an increase in government taxes and premiums has contributed towards keeping property prices up.
In summation, there is every evidence to suggest that Mumbai's real estate sector is going to remain a very attractive option for long and medium term investors in the years to come. Beyond just Mumbai and some other promising metros, with faster growth expected in Tier II cities, these will also attract more medium term investors. Greater clarity and an action on certain proposed measures can be expected post the 2014 elections, after which the market across board will likely see a further increase in property prices.
To know more about options for property investment in Mumbai, please visit: http://www.raunakgroup.com/