Mumbai, Gurgaon and Bangalore witnessing property price hike
Experts believe that the factors that have contributed to the rise are mismatch in demand & supply of land, high costs for building material like steel, cement etc. and the dearth of skilled labour.
Higher affordability is one other factor that skyrocketed property prices in these cities. Average salaries have increased by at least 10 – 12% per annum during this period, aiding professionals invest on property.
Due to the uncertainty of corporate investments, investors have moved to real asset classes like real estate and gold, which again is a reason for the growth of real estate in India as it offers better returns on investment.
A recent property survey stated that the when the Real Estate market started to recover in 2010 there was a huge demand-supply mismatch as many earlier projects got stalled due to the slowdown. The prices of these projects had a sudden hike because the rise in cost of construction. Within a span of four years, construction cost has gone up by at least 30 – 40%.
Although along this period prices of commercial space have hardly kept pace with inflation; residential property values have gone up significantly. This gives an indicator of a positive upward trend for residential property values in the future across the other larger Indian cities.
There are some other factors which effected the prices in these cities are much more regional.
In Mumbai the approvals, especially environment clearances, take a long time. Most projects during the aforesaid time period got delayed. The increase has been even higher at 70 per cent in Thane and 74 per cent in Navi Mumbai.
Metro connectivity in Gurgaon has played a major role in controlling the property prices of the region. Gurgaon enjoys good connectivity to the highways and Expressways as well. Indira Gandhi International Airport is in close proximity and all round better connectivity makes Gurgaon one of the hottest destinations among emerging real estate markets in NCR.
The property prices in the north of Bangalore are rising due to good connectivity. Hennur is among one of the hottest residential area and the area has witnessed nine per cent increment in first quarter of 2013.
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