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Why is Real Estate failing to make a mark in India….?

Pros and Cons of investing in Real estate with some stats

Real Estate is one of the most relied asset for investment in India due to its physical existence and usage. Especially, when the ticket size of the investment is huge, the traditional mentality of the Indians to invest in real estate still exists even with the HNI and Ultra HNI category of investors. Not only this, even government is constantly making amendments in real estate norms by- 

  1. bringing RERA Act into effect, 
  2. implementation of affordable housing scheme, 
  3. providing additional interest deduction on housing loan to assesses on buying the first house, 
  4. allowing 2 self-occupied property status and 
  5. reducing stamp duty rates very recently etc. in order to attract investment.

But in spite of all the above commendable efforts by the government, real estate still fails to make the expected recovery. Why is that so? Let’s have a look at some of the facts as to why off late real estate has failed to make a mark-

As per a report from statista.com given above, the growth of real estate from 2010 to 2015 has been approx. 10% YoY and from 2015 to 2020 has been approx. 11.2% YoY. But is the valuation or the growth rate in real estate prices justified? As per Bloomberg.com, Mumbai is the 67th most expensive cities in the world in terms of property rates. Today the approximate cost of 2 BHK in Bandra (Mumbai) with Built-up area of 1000 sq. ft. is around Rs. 3 to 4 crores whereas a property with similar description in Dubai would cost around Rs. 2.5 Crores with much better standard of living.