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Bihar: A member of BIMARU to an attractive real estate investment destination
"Two roads diverged in a wood, and I took the one less traveled by,
And that has made all the difference" Robert Frost
Indian real estate sector is indeed at a crossroad and market is poised on a fine balance. Our previous blog on real estate outlook , we delved into the significant drivers that will determine its fate in 2012. While on balance we were cautiously sanguine about India's prospect, we admitted that there are several risk factors that will make a cautious investor wary of jumping right in. Mainly, as the economy as a whole has slowed down in last couple years(partially due to rising interest rate, a deliberate inflation fighting measure from RBI) the real estate sector has faced its share of hardships (see chart below).
In the face of this slowdown and continuing uncertainty it may seem like a wise decision to move away from the real estate sector altogether. However, we will advise you to think differently from the herd (or follow the dictum of Robert Frost given above) . It is almost a conventional wisdom that the big markets like Mumbai, Delhi/NCR , and Bangalore are the natural destination of real estate investment for robust long run growth. We disagree; and for good reasons. Wethink the hidden gems are smaller states/cities where the real estate growth potentialis immense. Mainly, they are not handicapped by negative demand (e.g. like foreign capital outflow and slowdown of economy leading to weakening of commercial demand) andsupply (e.g. speculative construction by builders leading to high inventory andrising creditand other costs) factors observed in more mature and bigger markets (like Mumbai and Delhi/NCR).
In this blog we focus on one of those hidden gems, namely Bihar. From the lowly member of BIMARU club (which also included Madhyapardesh, Rajsthan, Uttarpradesh, and Orissa) it has come a long way and now presents an excellent opportunity for future growth.Here are we demonstrate how the supply and demand factor come together to make its property market one of the most attractive destination for real estate investment.
Demand Factors ·
Supply factors: ·
Looking at the demand and supply factors we see more reason to be optimistic about the Bihar housing market. As the economy grows at a faster clip and the supply and other regulatory bottlenecks are cleared up we will expect to demand and supply to grow at a strong rate. We want you to move in now and enjoy a long run benefit from investing in real estate there.
very nice analysis.
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