Hyderabad India, Real estate boom gone bust

he property scene has calmed down and it appears rather subdued,
compared to the aggressive domination seen in the later half of 2004,
writes Lalith Singh

Brief lull?: The real estate scenario in and around the city appears
to have become stagnant.

Has real estate boom that touched the lives of many and reigned for
more than two years finally taking a downward curve? Has it hit the
high and there is no way it can go up further and has to take a
downturn? Will the real estate prices take a drastic dip or will the
heat simply goes in for a cooling-off phase?

In the last few months, the property scene did calm down and it
appeared rather subdued when compared to the aggressive domination
that it had starting later half of the year 2004. For more than two
years, a variety of factors fuelled the boom and while some ended up
realising dreams of owning a dwelling of their own, others went for a
second and in some cases third and fourth property too.

The price rise which was phenomenal set new records both in
residential, commercial and agriculture lands and had people scurrying
long distances to acquire a slice of the boom. In just three years,
the entire suburbs have metamorphosed beyond recognition as they got
dotted with series of apartments, row houses, commercial centres and
started buzzing with unprecedented activity.

Those who lost out in the race were left dismayed while the ones who
made it to the bandwagon sported a broad grin. However, a certain
uncertainty did mark the whole boom and even while the buying spree
was on, a question on how long does this boom last did kept bugging
many.

And now ominous signs seem to have started looming over the realty
horizons. The industry insiders accept, though a bit reluctantly, that
the construction works have slowed down a bit, that the enquiries
about their projects have come down and that they are a tad worried.
"A lot of money, mostly borrowed, has been invested in projects and
builders are naturally apprehensive at the slow down," concedes one.
Causes

The rise in home loan interest rates and the sudden surge in the land
prices appear to have made many investors wary about putting their
money into the real estate while reports from across the country
suggested a possibility of the property boom taking a knock in the
days to come. However, many builders in the city look at this as a
temporary phase and some accept the stagnation in property dealings on
the ground that a correction of prices was taking place.

"There is a correction and we welcome it. Last two years saw all sorts
of persons entering real estate industry and spoiling the scene. They
are getting weeded out and once this process is over, the prospects
will be much brighter," says P.S.Reddy, President, Andhra Pradesh Real
Estate Developers' Association.

However, he refuse to see the trend as the property scene having a
block. Till the boom hit the city a couple of years back, the annual
price rise here used to be in the range of 10 per cent to 15 per cent.

The same however hit the roof in the last two years and the hope is
that it will get restored with the present correction.

The builders point out that the mid-segment which look out for flats
in the range of say Rs.1,800 to Rs.2,500 has not been that badly
affected as the one in deluxe and super deluxe category beyond
Rs.3,500 has been. This, perhaps could be due to the fall in NRI
investment into city real estate. Agrees Mr. Reddy, "the rupee turning
stronger has indeed affected the NRI investments".

A section of builders relate the sudden dip in enthusiasm of property
seekers with the beginning of education season. This is the usual
trend in the period of March to June, they say. "This is the time when
education of children keep the parents preoccupied and not investments
in real estate," it is pointed out.

refer to - http://www.hindu.com/pp/2007/06/16/stories/2007061650500100.htm