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Real Estate Price Spiral — A Realty Check
Posted by Pradeep Sadanapalli | April 11, 2008 | 323 views
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Loading ...What are the factors pushing up the price of property? Is price increase an Indian phenomenon only? Where is the market heading to now, wonders K. Sukumaran.
The ‘stop press’ news is that, in Noida, Delhi, a 95-acre commercial land has been sold for Rs. 5006 crore! The cost of one acre of commercial landed property is above the half century mark! After five years, what will be the ruling marke t rate there? How will the other metros and around react to this single transaction? Urbanisation is the most important factor for pushing up land prices.
Normally, a landholder will not sell his land unless he needs money for many urgent domestic needs. When there is growing demand for land for development into housing and commercial complexes and windfall prices are offered, the colour of money attracts the village folk and sale of land becomes rampant. Industrial development and infrastructure such as roads, railways, dams, airports call for acquisition of land by the government/promoters at higher prices.
In present day urbanisation, the property price rise is triggered by the competition among builders and developers. When demand goes up and supply dwindles, price has to necessarily go up.
When the returns from investment in banks, Government securities and company shares aren’t encouraging, investors will turn to gold/ silver and property. In India, the urbanisation factor has been of a high degree during the last 50 years or so which lead to increase in the price of land and related property.From genuine investment, people turned to speculation for making quick and substantial profits by investing in land around the developing cities and towns. Mumbai led the surge in property prices in our country in the 19th Century. Next growth centre of high intensity has been Bangalore. The Mumbai builders ‘promoted’ Bangalore real estate growth. Chennai and the twin cities of Hyderabad and Secunderabad are just behind. Second rung towns like, Pune, Gurgaon, Ahmedabad, Mysore and Kochi are the buzz centres these days.
Where will this price surging stop? It is very difficult to surmise that the skyrocketing prices will start to reverse the trend. Of course, there can be a slow down. The trend of ‘exclusive’ apartments for Rs.5 to 10 crore and private pools indicate only further upward trend, unless nature compels man to move out of the cities to villages.
The global trend has also been luxurious living. Nothing is surprising if the next 50-100 years show us some new and bold living styles like migration to rural areas and reversing the urbanisation path.
SOURCES:
The Hindu
Topics: Real Estate |
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