Not every one understands the dynamics of real estate and why the market is down. So let us understand the scenario in the real estate sector vis-a-vis the auto industry. Why is the real estate sector facing a slowdown in India while the auto sector is doing fine? If people are buying cars and bikes, why are they not buying houses and preferring to stay on rent?
In most of the developed countries, people own houses and cars are taken on long-term rent or, as they prefer to say, lease. So why shouldn't the same scenario be in India, especially considering that a house (or any property you buy) is an appreciating asset (well, most of the times!) and vehicles are a highly depreciating asset, with most experts considering the value of a vehicle equivalent to nil after 8 years?
The very first thing you learn in economics is demand and supply. When the demand is high and the supply is low, the market goes up and vice versa. There is a lot of demand for housing in our growing economy. At the moment, approximately 32 per cent of the Indian population stays in urban areas. This figure is said to go up to 45 per cent by the year 2030, with 13 per cent of the young and growing population shifting to urban areas. Therefore, the demand for housing is expected to remain quite high in next 15 years. When we consider 13 per cent of Indian population, we are talking big numb
With such big numbers, the effects can be seen in the auto industry. India is said to become the 4th largest auto market in the world in 2017 as per IHK Market, a London-based consultancy firm. The Indian two-wheeler market has overtaken China's and is now ranked one in the world. But at the same time, the real estate market in India is going through one of the worst phases it has seen in many decades.
(Amandeep Singh Dhaliwal - Vice President, Levidia Infra Group)