If you are guided merely by the vast volumes of data spewed out by real estate brokers, consultants, popular portals, agencies, builders or realty venture funds, then the bull market in this sector seems set to last for the next few years or maybe forever. They have a way of arranging all the good news into a fantastic investment scenario where nothing could possibly go wrong. We reviewed a case made out by Celedon Investment Research some time back. It says:
- Tax concessions to consumers and developers including rationalization of stamp duty and the repeal of Urban Land Ceiling Act in some states, along with computerization of land records have set the stage for urban renewal.
- Urbanization in India is far below international standards at only 28% as compared to 32% in China, 41% in Indonesia and anywhere between 75 to 80% in developed nations.
- Increase in salaries and lower taxes have apparently ensured that the cost of houses, which used to be a multiple of 20 times the annual income of buyers, is now down to 4.5 times (it does not say what portion of potential buyers fit into this classification).
- The next 15 months will see a billions of dollars worth investments in Indian real estate through joint ventures with international funds and developers. This will see a spate of buyouts and joint ventures in the industry.
If you step back from these rosy demand projections and look at the property market from the buyers' perspective, things look very different. For starters, the entire real estate industry has much to gain by being part of the same chorus about India's booming property market. Most companies connected with the real-estate and construction business and even those who are not, are all hoping to raise vast amounts of public money though Initial Public Offerings in this bull market.
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