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Price Correction Opens up Investment Options for Buyers

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  • Price Correction Opens up Investment Options for Buyers

    The economic slowdown has brought greater rationality to real estate prices. With prices correcting in overheated pockets of metros and tier II cities, residential real estate has become more affordable and the scales have tilted in buyers’ favour. While an investment in residential property may yield lower returns than an investment in commercial property, it is safer, especially if the property is chosen wisely. For city-based small investors, studio apartments or 1-BHK properties near known demand drivers such as IT hubs, large manufacturing units, and educational institutions offer good return potential. Smaller-format housing continues to have steady demand, especially in metros where company staffers and students seek cost-effective housing on rent. Rental accrual on such properties becomes a steady source of income, while the capital value invariably appreciates over time. The returns from commercial real estate are higher, but so is the risk. Such properties are also more expensive.

    Let us now turn to a city-wise survey of residential areas that offer good investment potential even in today’s bleak market scenario. While other areas in these cities are headed for correction, these locations will hold their own and might even offer positive returns. Mumbai witnessed some of the highest prices in the residential market till the beginning of this year. Clearly, those prices were not sustainable since the number of buyers for super-luxury houses is shrinking. Central Mumbai (specifically Lower Parel and Worli) witnessed the highest price escalation. The slowdown has affected these areas. The current slowdown has curtailed demand from investors. Most of the demand today comes from end-users. In Mumbai, there is no dearth of those desperate to buy affordable housing. Three areas of Mumbai offer such housing. These areas are likely to sustain their prices, while others are likely to witness a correction.

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