Starting late 90's, people started realizing that land is a valuable commodity that does not command the prices that it should. At the same time, there was a steady rise in the affordability of the general populace. More and more people started to buy houses and builders started building houses and commercial complexes to deliver to this demand. Prices started moving upwards especially around metros where the top paying jobs were concentrated. People with a penchant for risk and money to spend starting trading in houses - buying houses prior or near launch date of the project with no intention of ever staying there and flipping it when the project neared completion. This created artificial demand. Builders started constructing ever more office spaces and housing complexes to cater to this demand. Prices kept rising. This juggernaut kept rolling with a few hiccups till about 2010.
Fast forward to 2015. Look around you. Any educated professional now owns at least 1 house of his/her own. Some own more than 1. As prices have flat-lined, the artificial speculative demand has been swept away and what remains is a lot of speculators with houses that they cannot sell, even more builders with inventories that they cannot offload, and a mountain of real estate loans taken by these same builders that can no longer be serviced.
What happens now.
New product launches have slowed and will continue at a reduced pace. The existing inventory will slowly be taken up as more people move up the economic chain. Prices, which had touched stratospheric levels close to 2010 will continue to languish and even decline due to the demand supply mismatch. For the industry - good days are well behind it now. With the real estate bill likely to be enforced and with black money being sucked out by an activist government, all real estate firms are well and truly past the heady days of mid 2000s. Returns will now be be slow and unexciting.
The industry has now long died as an investment vehicle. Not to ever kick back to life. Mark these words - "Good days are never to be back for real estate. Not now, not in 5 years, not ever. Some people rode the real estate bus, most missed it. To those waiting on the bus stop to catch the next bus in will likely wait forever now"
Fast forward to 2015. Look around you. Any educated professional now owns at least 1 house of his/her own. Some own more than 1. As prices have flat-lined, the artificial speculative demand has been swept away and what remains is a lot of speculators with houses that they cannot sell, even more builders with inventories that they cannot offload, and a mountain of real estate loans taken by these same builders that can no longer be serviced.
What happens now.
New product launches have slowed and will continue at a reduced pace. The existing inventory will slowly be taken up as more people move up the economic chain. Prices, which had touched stratospheric levels close to 2010 will continue to languish and even decline due to the demand supply mismatch. For the industry - good days are well behind it now. With the real estate bill likely to be enforced and with black money being sucked out by an activist government, all real estate firms are well and truly past the heady days of mid 2000s. Returns will now be be slow and unexciting.
The industry has now long died as an investment vehicle. Not to ever kick back to life. Mark these words - "Good days are never to be back for real estate. Not now, not in 5 years, not ever. Some people rode the real estate bus, most missed it. To those waiting on the bus stop to catch the next bus in will likely wait forever now"
