During the Jan-Mar 2014 quarter, rental markets across Indian cities displayed dynamism while capital markets remained subdued.
Due to the underlying low-sentiments amongst property buyers and the quarter ending just a few days before the general elections, the capital markets across the country remained stable. However, contrary to the capital markets, it was interesting to note that the rental markets were robust.
The general consensus in the country was against buying property which led people to opt for rental accommodations. This is the prime reason that held the growth of the National Property Index (NPI) during the Jan-Mar 2014 quarter with a rise of just a per cent.
More and more people were inclined towards renting out properties which reflected in the significant rise of rental values in prime localities across different cities. For instance, some cities such as Ghaziabad and Mumbai recorded a rise of rental values in almost all the localities that were tracked. Rental values rose by 5-10 per cent in several localities across different cities. This also posted an opportunity for property owners to earn some rental returns at a time when capital returns were hard to come by.
The reluctance towards buying property was also clearly visible from the capital trends across cities. Capital values have either dropped or remained largely stable across cities. Pune and Hyderabad witnessed the maximum positive growth with a rise of 3 per cent in the city index. Ghaziabad and Ahmedabad, on the other hand, recorded a negative trend.
As was visible in the previous quarters also, buyer preference continued to be inclined towards the mid-segment housing. The budget category of Rs 30-50 lakh was the most preferred. Even though there was a healthy demand of over 20 per cent for luxury properties, the segment continued to evade buyers. This resulted in an over-supply across all cities.
Thus, the latest edition of PropIndex, now in to its third year, revealed that the real estate markets are still awaiting resurgence. Now, with the general elections drawing a close across cities, positive trends may be expected post the results.
Courtesy: Times of India Real Estate Section