As I took a quick evening walk around DLF phase V this evening, I could see a lot of flats under construction. I also saw a lot of new flats that are ready to get occupied but still vacant and quite a few unoccupied shopping complexes. I had started noticing such huge construction activities which I felt was definitely an oversupply ( @ the prices quoted) a couple of months ago in many parts of Bangalore too. Almost everything around the world including commodity prices, stock markets, real estate have fallen sharply. But still I feel the Real estate sector in India is still being kept afloat. The no: of transactions of buying/ selling has come down in reality sector but the reduction in prices is not very visible yet. ( Although some 20% correction is seen / reported in some places)
I am not sure about the reasons as to how the prices have'nt fallen sharply. Is that because of Indians sentiment towards owning a home? or because of the political and black money nexus with real estate or because of a lack of transparent pricing visible to the public.
Even in premium areas the return from house in terms of rentals is just 4%. I am not sure who likes to own all these houses. These things still remain a mystery for me.
The stock prices of most of the real estate companies have corrected by almost 90%, but an equivalent correction has not happened in the real prices. The real estate companies may manage to survive by the killing profits that they have made over the last 3-4 years , but how long can they continue to hold these prices is the question.
But one thing is for sure, that the prices may remain flat for 4-5 years from now unless a dramatic boom revives the Indian economy. But till the time we have the salaried class who are ready to shell out 50% or more of their salary as EMI for 15-20 years, the developers would try to take an advantage.
I think the match between developers and buyers is in a tie breaker situation now. (My thought that prices would fall in India like a pack of cards hasn't come true yet.) I am keen to see who wins the match from hereon!!