Is real estate losing its charm as the most preferred asset class among Indians? Sales figures between April 2014 and March 2015 have tanked 34 per cent across nine cities (Ahmedabad, Bengaluru, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai, Noida and Pune), according to PropTiger.com, a real estate adviser. Only 2.2 lakh units were sold in 2014-15, compared to 3.35 lakh units in the previous year. Gurgaon registered the sharpest drop in sales-57 per cent-while Pune fared relatively better with a drop of 19 per cent.

The narrative now has a similar theme across a large section of urban India: Inventories are piling up. As of December 2014, there has been a rise of 50 per cent in the unsold inventory level since June 2012. In six cities-Bengaluru, Chennai, Hyderabad, Mumbai Metropolitan Region (MMR), National Capital Region (NCR) and Pune-there were 6.69 lakh unsold units at the end of December 2014 compared to 4.44 lakh in June 2012, according to real estate research firm Liases Foras.

Given the kind of returns it has delivered in the past, real estate has always been the most sought-after asset class. Even after the financial crisis of 2008, some residential real estate markets witnessed unprecedented growth. The increased demand for real estate between 2009 and 2013 saw prices double in some markets. For example, property prices in Noida Extension, one of the key markets in the NCR, almost doubled from Rs 1,830 per sq ft to Rs 3,476 per sq ft between March 2010 and March 2013, says PropTiger.com.

Amit Bhattacharya, 46, working with a telecom company: He started investing his monthly savings through SIP in various debt and equity mutual funds. Amit Bhattacharya, 46, working with a telecom company: He started investing his monthly savings through SIP in various debt and equity mutual funds.

But things have changed since. Real estate prices have stagnated or even declined in some markets. The sector turned out to be the second-worst performing asset class in 2014-15. Key micro-markets such as Dwarka Expressway, Noida Extension, Thane, Panvel, Whitefield, Sholinganallur, Dombivali saw prices rise by 1 per cent to 4 per cent in 2014-15.

Besides, builders have also failed to deliver projects on time. Only 20 per cent of the projects in NCR and 15 per cent in MMR are set to be ready as per schedule, according to Liases Foras. Poor returns and inability to exit have made people look for alternatives. "Given the quantum of investment real estate requires, the lack of liquidity has made people look for assets such as equities and debt mutual funds," says Jitender Solanki, a SEBI-registered investment adviser.

At the current pace of sales, it will take over three years to clear the existing inventory, according to PropTiger.com. Experts suggest that it is the right time for investors to enter the market. "As developers will remain under pressure due to excess inventory in Gurgaon and Noida, buyers can expect good discounts," says Santhosh Kumar, CEO, operations, and international director, Jones Lang LaSalle India.

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