Ahmedabad happens to be one of the 11 countries for which the reserve bank of India would prepare one index for commercial and one for residential properties. This is done to curtail speculations and expected realty bubble burst in the coming years. The RBI report on asset price monitoring system (ASMS) advised to formulate these indices two months back.
Many different countries such as Canada, France, us refer to these indices for realty prices.
The report says, RBI should start compiling a realty index and update it every quarter. To begin with, the report has proposed Mumbai and Delhi where property prices have skyrocketed to record levels. After these cities RBI would add 10 other cities which include Greater Chandigarh, Hyderabad, Chennai, Bhubaneswar, Pune, Jaipur, Kolkata, Lucknow, Bangalore and Bhopal.
The real estate price index once devised would become the primary index that could be perused by investors to gauge the performance of companies that are listed in the realty sector. The index can also help the investor analyze how real estate is performed in comparison to stocks and bonds. It can also provide information on the risk involved in a particular investment and returns that can be achieved from it.
The ASMS report has defined the deficiencies this indices would help overcome.
Analysis of the growth in real estate sector in last few years was performed. It revealed some very interesting statistics of the growth. The facts go like this:
In 2007, the office sector experienced highest demand. Grade A office space of about 32 million sq ft leased out in that year. But after that, it has been a decline throughout. In 2008, it reduced to 28 million and a further decrease to 21 million in 2009. However, now a growth back to 28-29 million is seen. Although it is less than what was in 2007, but still is complementary. This demand majorly comes from infrastructure companies, from Indian corporate who wish to merge, from pharmaceutical etc and it is at pace in Bangalore, Delhi and Mumbai.
After the office space, we move on to the residential sector, where once again these three cities are putting their landmarks. Even on the account of increasing prices, these cities have managed to go through a rise in demand. In cities like Mumbai where the pricing went through a downfall of around 25-30%, it has once again come back with the demand as well as pricing. However, the situation is not the same in the other regions of India as far as residential sector is concerned.
Next comes the retail sector. This sector has not seen much growth. Although the demand from some new Indian corporate, the existing retailers and many foreign retailers, this sector still seems to be gloomy for now.