I have following thought, if we keep the investment horizon of 3-4 years then real estate will be a definitly a multi-bagger. Though Prices have corrected sharply and evaluation is cheaper due to pessimistic outlook for heavy debt, high interest rates and overall slow economic growth projections etc. But i feel it will rebound due to reasons are as below:
1) Indian land on per capita basis is small as we are billions i.e double of USA population while our land area is half of USA. This example is to emphasise the point only, actual data may be slightly different.
2) Housing needs for mainly big cities will be always there as expansion rates of city is not fast. Since interest rates are going up so does rentals also. Sooner or later tenant will find buying home again a better option than continuously paying high rentals.
3) Our banks are safer unlike USA and Subprime game will not happen because in India Loans are given against individual not property baught contrary to US.
4) Since stock mkt is not enthusiastic so people who have cash will revert to real estate as safer heaven for investment though caustiously. For example what majority will do if they have say a cash lying in bank to the tune of 10-15 Lacs, Buy shares i dont think so majority will dare so.
5) Debt pressure will force builder to offer attractive prices for thenew home buyers.
2) Housing needs for mainly big cities will be always there as expansion rates of city is not fast. Since interest rates are going up so does rentals also. Sooner or later tenant will find buying home again a better option than continuously paying high rentals.
3) Our banks are safer unlike USA and Subprime game will not happen because in India Loans are given against individual not property baught contrary to US.
4) Since stock mkt is not enthusiastic so people who have cash will revert to real estate as safer heaven for investment though caustiously. For example what majority will do if they have say a cash lying in bank to the tune of 10-15 Lacs, Buy shares i dont think so majority will dare so.
5) Debt pressure will force builder to offer attractive prices for thenew home buyers.
So it looks like that real estate for housing sector players is very safe at the moment where downside is near zero while upside looks tempting.
Only place where i am not strong is how to evaluate the Real Estate companies. Typical example is low debt , land bank etc but still not convincing for a conservative investor like me. I mean even if some XYZ company reports that they a huge land bank but we never know whats the real value of th land i.e is it in prime location!
Any help from senior member will help here to zero in on for companies in real estate segment where goddess Laxmi is awaiting us.
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