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Ring in the new! - 26th December, 2009. Times Property

There is reason for confidence as the market seems to be backed by actual users and they are not going anywhere

Looking back at the events from almost the same time last year we have witnessed the quickest turnaround in real estate and equities after a downturn. I don't know if it was just the stimulus injected the world over or a real economic turnaround. Most "industry experts" and "pundits" were left speechless including me when in the second financial quarter (July to September) India posted great results especially in the real estate segment which was backed by actual demand and serious long term in vestors and not speculators.

Around the same time last year property prices went through a sharp and quick correction of almost 25% within a period of two to three months. The effect lasted till May-June and the turnaround almost recovered the 25% correction and in certain locations surpassed earlier highs which is a good sign showing a healthy market which is poised to grow.

  However, the rental market remains a matter of concern in both residential and commercial segments. This is one of main triggers that would determine which way we are heading. For an overall recovery and more solid growth story, a recovery in rentals which are down by almost 30 to 40% is a must. Also absorption of vacant properties over the next year would support the recovery in capital values and allow it to sustain and grow further. A word of caution: If I was buying/investing with a purpose of renting in today's time especial ly if I was borrowing and investing, I would be very cautious.

Looking ahead, future development/opportunities for devel opers lie in affordable to mid in come housing and slum redevel opment seems to be the only way. Redevelopment of existing society buildings is always an expensive option in comparison. In select locations one can look for reputed developers doing such construction and look for opportunities to buy or invest at a lower levels into their 'free for sale' part of the development.

 Overall, with a long term view of 5-7-10 years, I can see a steady to robust growth in the city. We are somewhere in the center of the 'W' shaped recovery with the exception that we did not have a very sharp fall or decline and God forbid if we go through another phase of downturn that too does not seem that it would be very sharp or extreme. The reason for my confidence is that the market seems to be backed more by actual users for self-use and occupation and they are not leaving or going anywhere. If anything, more non-residents are coming back and the city and other metros and Tier II cities are witnessing rise in residential demand.

While we may not know for sure what the future holds for us, the good thing about the future is: It comes one day at a time! It is that time of the year where you ring out the old and ring in the new.

This would be my last column after four years of writing and I have thoroughly enjoyed sharing my modest views with you. Good luck and best wishes to you.