Navi Mumbai resident Naveen Kumar’s hunt for an affordable home doesn't look like ending anytime soon. “At best, prices may stabilise,” said Kumar, a mechanical engineer with a multinational firm.
This week’s bloodbath in the stock market may have shaken investors’ confidence across many businesses, but few expect any major reversal in realty prices that also have run up sharply in recent years. Real estate developers and analysts said demand in the property market will likely stay robust given that the broader economy continues to grow at a brisk pace.
“There could be a short term liquidity problem affecting installment payments, but there can’t be a fall in demand,” said Niranjan Hiranandani , managing director of Mumbai-based Hiranandani Constructions. “The economy’s growth parameters are very strong and realty will do well.” Others agreed.
“The fluctuation in realty prices is not as violent as stock prices. The developments may have limited impact, some purchase decisions may be deferred,” said Pranay Vakil, Chairman of Knight Frank India, a real estate consultancy.
Vakil even expects more people could switch to investing in real estate. “This is the right time for people to realize that real estate is a better asset class than stocks,” he said. Also, the realty market is illiquid and Indians have a cultural bias for assets in the form of real estate.
“People will not stop buying unless the overall economy is shaken,” said Anuj Puri, chairman & country head, Jones Lang Laselle Meghraj. “Today there are more end-user buyers than speculators and this is why I don’t see any price correction.”
Still, there could be some decline in property prices especially in suburbs of Mumbai and Delhi, if the stock market remains bearish for long.