Tuesday, 28 May 2013

India, the land of virtual real estate boom!!

A country, carved out from the chisels of poverty and homelessness, and other social hooligans, a country based on fiscal disparities and special considerations based on them-India has for a long time been a country where people have wanted to show off their wealth, however little they may have. It was during a savage search mission for such an investing solution, that Indians came across Real Estate. Many people didn't even understand what this funny word meant. I mean...all estates are real, right?? But now....real estate is the only market where products(land) sell like hot pancakes, with 'through the roof prices'.....or at least that's what Indians like to believe. In the graphs below....you can see that staring from about 2008...all the so-called developed nations had started to face a huge real estate crisis, that have started to show signs of healing....almost 6 years after the crisis. But apparently, this was the time when Indian real estate started to blossom.


The prices of properties were on a hike to the Himalayas, in India....whereas, the people all over the world were almost skinned alive by this crisis. Real estate is a concrete yet dynamic investment.....while it is the biggest and most popular one in India.....the price increase always seemed a bit unrealistic. All over India, no matter where you are....you shall get an extremely good price for one investment-property!! But this was far from true, because the market was trying to hide all it's bruises with 2 hands....and it was only a matter of time before the bruises became too big to cover. As people became more and more indulged in the real estate market, it became too saturated and in the end could not hold up against the immense expectations of the people. As people believed in the doubling of prices in a matter of weeks, they were indeed turning their faces against reality and the global real estate crisis. Transactions were plenty. The poor sold their land, the rich in turn bought them, hoping for the 'doubling & tripling phenomenon'. This did happen as far back as 2009 and 2010, when people were still 'catching up' with the new kid on the block. This mass craze for real estate was indeed a recent phenomenon. From the philosophy of 'land for home' it became 'land for fame'.

The people at blame are the so-called middlemen or brokers who inflate the actual prices and serve it to the credulous land-owners of India. But the mantle also falls on us people who failed to recognise what was happening. Real estate is just like any other market...in working model!! If the price of sugar falls indefinitely....then there is something to worry about, and viseversa. This kind of rapidity in price increase was always fishy. But still, there were 100s of transactions. There were needy sellers, who sold lower than the market....there were pathetic sellers, who sold way above the market, and a few in between. But the attractive fact was that the market was still not at equilibrium. With almost all people willing to sell their land...there was still more buyers than sellers. What a shocker!! This kind of land-frenzy has developed after decades of subjugation under colonialists. Centuries ago...kings were fascinated by the idea of owning land. Something that was basic and concrete, and best of all....un-creatable and limited. This is what led to Alexander-the great wanting to conquer the world. It would have made him, the owner of the most distinguished asset in the world-land.

But having said so....the current 'game-changers' like globalisation, development, urbanisation and industrialisation have created considerable changes to the real estate-scenario. Some lands are more valuable than others. This is not rocket science, but simple common sense. Land that is nearer to the towns and cities will have better facilities and services and hence will be more valuable than those that are deep into the 'larynx' of the country. But we Indians have failed to understand this little fact. Even after considering the fact that scenic beauty and serenity are factors to be noted......the value of these two sets of land cannot be same. However, it is in India. In India, having a 4 bedroom apartment in Mumbai and Patna is same,,,,,despite the fact that Mumbai is the commercial capitol of India. If you go further deep into the rural and country side....the price keeps on increasing.

Thus the belief in Indians towards this hypothetical price boost went on till mid-2012, until, the great day of acceptance, or was it?? The web-portals and newspaper columns were empty....the same ads repeated over and over again. The entire real estate market came to a standstill. The reasons for this abrupt dis-functioning could be many.
1) For one.....it could be the simple fact that sellers ran out of land, considering it is a limited resource.
2) It could be because, people actually realised that the prices were exorbitantly high and that buying land would now be impossible...and thus no buyers.
3) It could be because, people found the recent gold-price hike luring.
4) Or it could be because, people actually realised that they had raised the prices to a position, at which point, buying was not an option. Still, they can't purposely bare losses and sell it at a lower price!!

Any how....the fact is, this virtual real estate boom has in the end made fools out of all people who ended up believing this implausible hike. They are now in between the devil and the sea, where the only thing to cheer about...is the fact that they are not alone!!!!



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