Realty and growth

Things might shape up in the property market in various segments: Residential Commercial, Retail and Special Economic Zones (Industrial and Warehouse) in different ways. We have always been curious about the future and our need to know what next to plan for the future with regards to realty.

There are cycles in all markets, be it UK, USA, or parts of Central and Eastern Europe, Asia and Asia Pacific. Now within these countries some cities get badly affected and some cities do not. For example New York is going through a correction phase but Hong Kong is holding on strong. Dubai and the rest of UAE has been on a non-stop price rise and with oversupply about to hit the market correction phase.

One thing is for sure that correction phase goes through its process, Dubai will sustain stability due to their commitment towards making it into global city and destination. Roads bridges and metro work is in progress on 24×7 basis and they work on very stringent time lines.

In Singapore there is resistance because premium sea face properties are asking for S$ 4000/- (Rs130,000/-) in a location like Sentosa. There too, prices are expected to correct by 15 to 20% over the next year. Most of these developed cities are chosen as destination to settle into for career, family, health, education, environment infrastructure, weather, civic discipline etc. Singapore or one is most preferred for the obvious reasons since it has all.

Coming back to Mumbai, we can and most probably will have it all within the next 10 years. All we need is discipline within the political will to do it. The beginning of the correction cycle is just starting. The difference today is that sellers and developers are quoting almost 25 to 30% higher than the realistic market value or price. Who decides the value? It is always the buyer. Then a professional property consultant cum valuer who knows the inside out of the business and sentiment of buyer and seller decides the value. Some valuers are compelled to agree to the seller’s price and claim the same to be a benchmark which never makes sense. Now the same folks who talked nonsense will talk sense, given how things are shaping up in the finance and banking sectors.

The good news is given a 10 year perspective things are set to look great. Nothing has changed on the ‘India story’. India is poised to grow. However, the correction phrase will last only till 2011 end, after which there is no turning back. The prediction is that by 2018 the high-end luxury type properties in premium locations at Mumbai will be priced upwards of Rs 100,000 per sq.ft.

On the commercial front by 2018 ‘Grade A’ office buildings will be in the range of Rs 30,000 to Rs 90,000 in Mumbai and given the fact that South Mumbai redevelopment would have taken shape in 10 years and there would be enough reasons for sustainability (only future can factor this).

Retail is one complicated segment to predict because it would be governed by demographics of a given location, accessibility, connectivity and of course quality and brands incorporated within. This segment will see the sharpest correction and will separate the mean from the boys within the next five to seven years and by the end of 10 year period we should see sustainability.

Special Economic Zones would be one segment to watch out for. Once again the next five to seven years one would know what is finally happening outside the periphery of Mumbai. This would bring enormous job opportunities and real estate transaction volumes can be unimaginable in times to come. SEZs will bring about great infrastructure necessities like power, road, rails, airports and ports without which they will never be able to be successful. The township projects in 10 years from now will see the success stories too since all the development on SEZ will bring about habitation.

The future looks bright as mentioned above – only if our political will to be super country sustains and our politicians remain more focused on the much needed issues and not on inter party gimmicks.

Individuals too must stay focused and be graceful as people of this city/country maintaining and adapting to the right civic, moral sense and conflict and then we will only see prosperity over the next 10 years and beyond.