NEW DELHI: Sales pitches by real estate firms and property brokers are becoming more realistic as they learn from a slowdown and a consequent softening of returns.
"Most buyers today understand that real estate as an asset class is a long-term play and short-term flipping can be a risky strategy," says Ashish Jerath, vice president-Sales, Emaar MGF, a Delhi-NCR based builder.
So pitches that indicated high returnsof 20-25% in eight to nine months around 2008-2009are more moderate, talking about a 50% return in 3-4 years now.
Unlike the boom time when people treated real estate as a trading commodity and invested money blindly, investors these days check a developer's track record, construction speed, land use, among other aspects before finalising an investment.
The period of 2008-09 witnessed a sharp drop in real estate pricing due to global economic concerns, which was followed by a sharp recovery in prices. In this volatile period, those who decided to purchase real estate assets made handsome gains.
But slow economic growth and high home loan rates hampered growth in the real estate sector since 2010. Home sales plunged 17% in top six markets last year and unsold inventory level rose to 647,484 units, according to property consultant Knight Frank India.
"Earlier investors used to put their money right at the conceptualisation stage of a project but after the market downturn, they are now a cautious lot and are investing in the middle or at handing over stage of a project," said Sam Chopra, chairman of real estate brokerage firm RE/MAX India.
Pawan Jasuja, director of Noida-based brokerage firm Finlace Consulting said they do all necessary checks before pitching products of a particular developer to their clients just to be safe. "Pure investors are finding very less opportunity in this market but the semi investors are focusing on value for money projects," he said.
However, with all the macroeconomic indicators showing recovery, upsurge in the job market and reduction in home loan rates, experts see a probable recovery in the sector sooner than later.
Rating agency Fitch Ratings also recently said the property market will recover by end-2016 as the country's investment climate improves.
"Those who will take the bold decisions today will be the winners of this cycle, and maybe in 2018, we will be writing about them and the gains they made," Jerath of Emaar MGF said.