Is The Real Estate Market In Trouble?
There has been a slowdown in the IT sector and layoffs in start-ups. This has affected real estate demand. The RBI raised interest rates have impacted real estate in terms of borrowing costs for builders and consumers (EMI). There was pent-up demand post-Covid, which aided real estate companies in clearing inventory. The pent-up demand is now over. Many states provided concessional stamp duty to boost sales, which is no longer available. New launches have increased substantially to ride good sentiments. No Long Term Wealth Higher input costs would squeeze margins. Real estate companies will always face corporate governance issues. No sustainable wealth by any of the real estate companies. Since its inception, the Nifty realty sector (which reflects the behavior and performance of Real Estate companies) has given a negative return of -5%. Despite the fact that the overall market has risen. Conclusion There is a clear indication that real estate sales have slowed. While the price of raw materials has increased, it is unclear whether the company will pass on the savings or increase margins.Higher interest rates will impact real estate demand. Layoffs and slow recruitment from IT and start-ups will impact real estate demand. We believe that real estate companies will experience a decline in demand, which may prevent them from providing capital appreciation.
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