Economic Crisis: Cold markets, sizzling properties
Property prices are melting. If you are waiting for them to fall neatly into your budget, prepare for a very long wait. Not that there is no correction, but the extent is limited. When the real estate party was on for the past 4 years, property prices rose by over 100%. Will they drop as much? Not likely. So how do you invest in real estate when home loan rates are so high and prices refuse to drop? By looking for little-known locations where prices are still low or where they have shrunk by a chunky 20-25%. These untapped locations hold out maximum promise of appreciation as the real estate market of the metros, Tier I cities and popular IT destinations at the Tier II level are becoming saturated. The real bargains are available in small towns targeted by big developers. In an Ernst and Young survey, almost 56% developers said that they will foray into Tier II cities and 20% find Tier III cities attractive. One such set of locations is “spokes”—cities that derive prosperity from nearby real estate hubs while offering affordable cost of living. Also watch out for big city suburbs. “Poorly connected locations that fall on major planned roads are a good bet,” says Ambar Maheshwari, director, DTZ Debenham Tie Leung. Sanjay Dutt of Cushman & Wakefield, a real estate consultancy, says that property prices in small cities are still lower compared to those of big cities. Tracking the IT industry’s movement to smaller towns is a good way to identify which ones will witness appreciating property prices. Look out for better infrastructure, proximity or connectivity to established real estate markets and creation of sustainable jobs. Even in bigger cities, pick areas where a major infrastructure project is being planned and give priority to investment corridors over micro locations. For example, if real estate development is taking place along a highway, locations along the same road will also benefit. But don’t invest blindly just because prices are low. Deals in upcoming suburbs and smaller cities can be messy. “Many developers are booking flats in small towns without government clearances,” warns Maheshwari. So do your homework well before buying property there. We have made your work easier though. After some digging around, here’s a list of 8 small cities that may become property hotspots tomorrow.
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