THE Indian real estate market has seen phenomenal growth in the last four years. The trend has been fuelled primarily by the large number of multinationals setting up shop here, resulting in demand outstripping supply. These companies prefer to buy rather than rent accommodation for their staff and the hot favourite for most has undoubtedly been Bombay.
After having shot up by about 200 per cent in the last three years, real estate prices in Bombay have plateaued. But only temporarily. The uptrend is expected to continue after the elections, though at this point it's difficult to gauge what the rise will be. The city's limited supply of land has more to do with the laws than its topography. The Urban Land Ceiling Act limits individual holdings up to 500 sq mt of undeveloped land. The result: more than one-third of the city's land is lying undeveloped.
With prices in Bombay becoming increasingly prohibitive, investors should now be looking at cheaper alternatives in other metros such as Delhi, Bangalore, Madras and Calcutta. In Calcutta, commercial space has doubled in the last one year even though it is not likely to reach Delhi prices for another 5-10 years. Delhi has seen 100 per cent increase in residential property rates since 1991, and its commercial property prices have gone up six-fold since 1990. But Delhi still has a lot of potential with residential price only 10-20 per cent of those in Bombay.