Background: What is the overarching sentiment about the state of the real estate market and is this perception accurate? Founder of Leo Global Properties, Chetan Bhadage explores in this article.

A couple of weeks ago, we had a really healthy discussion and awareness session with our investors regarding the state of real estate market during a presentation on Dubai Property Investment. We were concerned about the level of financial awareness among the general public and thought it apt to put up some basics on real estate investing on this platform. It’s time to bust some myths.

Some major objections that came up from the crowd were common queries like “who will manage and coordinate the process of buying property”, what is the authenticity and reliability of the builders”, “what about the safety of my invested money”, and “will Indian banks provide me finance to invest in a foreign property” etc. These came up mostly from non-regular investors and those who did not know they could invest outside the borders of India, and were literally overwhelmed to know that it is possible to invest overseas, safely and also perfectly possible to get a finance on the property from local banks especially in Dubai.

But the most prominent observation that came up from a few seasoned investors was: Currently there is a downtrend in the real estate market.

We take this opportunity to test our readers’ levels of FQ (Financial Quotient).

How many of our readers believe in the above objection? For those who do believe in it, here’s a basic lesson on financial awareness. It’s all about supply and demand, the basic law of economics. Both supply and demand are inversely proportionate to each other.

This means, when the supply is more the demand declines. In other words, the sellers (Developers) have a lot of inventory ready to be sold and the home buyers have a lot of options to choose from. So, in this case, the buyers are in a strong position to bargain the rates since they have multiple options from different developers to buy from. This also means that the buyers are in control, they dictate the property rates. This is called the buyer's market. This is the present state of the global real estate.

People have a misconception about “bad” market. A buyer’s market is not actually a “bad” market. It is just that the market control has shifted from sellers to buyers. That’s it.

The other state when sellers (developers) are in control and dictate the property rates, it’s called the seller's market. This happens when there is a strong demand for housing, but the availability/ supply of ready properties is less and there is a shortage of homes for the buyers. This was the scenario up until a couple of years ago. Due to modernisation initiatives and boost provided by governments to the real estate sector combined with rise in purchasing power of the people, there was a blast in construction activities surging the demand for modern, lavish and lifestyle housing during the early years of this decade shooting the property prices through the roof.

In general, real estate moves in cycles. Global real estate values don’t move in harmony and show discordant data sets. We can correlate more with localised markets data. Especially examining the Dubai Market, the prices peaked in mid 2014s and the market saw a steep fall of around 30% in housing prices since then.

Real investors are taking the right decision at the right time and investing in properties when prices are down. A real investor is one who is able to connect the dots and grab the opportunity at the right time.

Also read: Dubai, the hidden gem for real estate

When one says that the market is “bad”, they are only talking about one side of the coin. They mean that the market is bad for the sellers (developers). Looking from the other side, it actually is an opportunity for the buyers (investors) to jump in when the prices are on the floor. It is estimated that the prices will decline more in the coming time, but you never know when the sides flip.

For instance, if we examine the Off-Plan Sales in Dubai over the past 22 days in the month of November, the number of sales is 1459. (Based on data published by Property Monitor).

Now, the question to readers is, who do you think are buying these properties? If the markets were really “bad”, do you think there would have been so many real estate deals happening?

The reality is that the real investors are taking the right decision at the right time and investing in these properties when the prices are down. A real investor is the one who is able to connect the dots and grab the opportunity at the right time. What type of investor are you?

Also read: RERA Act - Beginning of a new era in Indian real estate sector

Image source: shutterstock.com

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