Realty: Difficult To Buy And Rent

Realty prices might be showing signs of easing, yet its tough to buy a house. Prices are still high and loans are getting expensive. Renting a property is also getting dearer.

According to analysts and developers residential rentals are hardening, registering a 10% growth. The demand for rented residential space is high as India has very low residential rental yields hovering around 3-6%

At the same time home loan interest rates are around 11% to 13%. While new property sales are slowing down, rentals are showing an upwards trend.

Many prospective home buyers are deferring purchase, expecting a dip in prices, and looking for renting accommodation in the short run.
“People are nervous about spending the capital they have in times of uncertainty. Therefore renting remains the only option. Though India is also unique as lot of people prefer to park money in residential projects and lock up apartments, which reduces the supply of apartments for rent, putting an upward pressure,” says global real estate advisory DTZ director Abhilash Lal.

Ansal Housing and Construction Director Kushagr Ansal points out, “Real estate yields in India are very low, pegged at 4-6%. This makes renting a lucrative option.”

Though new supply is being added to the pool of residential properties, it hasn’t really helped in stabilizing rents. Parsvnath Developers COO Dr B P Dhaka said, “New supply is not coming in the preferred centrally located residential areas. Also maintenance and construction costs have gone up in the last one year. All this has contributed to higher rentals.”

Omaxe executive director Vipin Agarwal points out, “Since residential rentals and lease are long term arrangements, there has not been a significant increase in rentals in last 6-8 months (for people already living in rented properties).’’

One Comment

  1. Posted July 17, 2008 at 5:19 am | Permalink

    With slowdown hitting the real estate sector, land/property deals appear to be falling like ninepins. The latest deal to come unstuck is one involving the K Raheja Universal group and Lupin.
    According toSources the negotiations between the two parties for part of Lupin’s land at Boisar in Tarapur and Thane district has fallen through primarily because of the existing insecurity in the real estate market.

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