Analyzing Indian real estate market trends? Take a cue from nature!
Most of us who are in the Indian real estate industry will remember the great recession that started towards the end of 2008. The markets sunk globally, and we, in India felt the heat substantially. Jobs were being lost on a daily basis. Immense losses were recorded on Dalal Street and there was generally an air of depression. Since there was no money available (ditto good sentiments in people's hearts) developers who had millions of square feet of residential spaces in the pipeline were left groping in the dark for sales.
The immediate result of this was distress. With high debts and immense pressure from equity holders, per square feet prices in Bangalore, NCR, Mumbai and a few other cities started falling to keep the stock moving. Cash flaw was priority. It helped some while others suffered huge losses. However, the Kolkata market held stable somehow. Most people argue that real estate values in Kolkata had never really peaked so a large correction was unlikely. Could be true. Lets take a cue from what the weathermen call 'Microclimate.' Wikipedia defines a microclimate as "a local atmospheric zone where the climate differs from the surrounding area. The term may refer to areas as small as a few square feet (for example, a garden bed) or as large as many square miles."
In the same way, the new jargon being used by real estate analysts globally is 'hyperlocal'. It works the same way a microclimate does and there are trends that speak in its favour. Like the Kolkata example above. Real estate is so hyperlocal in India that all cities together are unlikely to head towards a boom or a recession at the same time. While some move up, other cities may be facing a small recession when it comes to real estate in India.
Factors like jobs, population immigration, large universities and residential over supply all make for the creation of a microclimate in that particular region. Smart deduction isn't it? Next time someone tries to stump you with that question, think microclimate, think hyperlocal!
The immediate result of this was distress. With high debts and immense pressure from equity holders, per square feet prices in Bangalore, NCR, Mumbai and a few other cities started falling to keep the stock moving. Cash flaw was priority. It helped some while others suffered huge losses. However, the Kolkata market held stable somehow. Most people argue that real estate values in Kolkata had never really peaked so a large correction was unlikely. Could be true. Lets take a cue from what the weathermen call 'Microclimate.' Wikipedia defines a microclimate as "a local atmospheric zone where the climate differs from the surrounding area. The term may refer to areas as small as a few square feet (for example, a garden bed) or as large as many square miles."
In the same way, the new jargon being used by real estate analysts globally is 'hyperlocal'. It works the same way a microclimate does and there are trends that speak in its favour. Like the Kolkata example above. Real estate is so hyperlocal in India that all cities together are unlikely to head towards a boom or a recession at the same time. While some move up, other cities may be facing a small recession when it comes to real estate in India.
Factors like jobs, population immigration, large universities and residential over supply all make for the creation of a microclimate in that particular region. Smart deduction isn't it? Next time someone tries to stump you with that question, think microclimate, think hyperlocal!
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