theprint.in-Housing is not a smart investment for the Indian middle class anymore
Indian real estate — barring luxury projects that cater to the non-price-conscious super-rich — has been in a bubble for some time now. But no realtor will tell you that. Still, both anecdotal evidence and hard data point in that direction.
As of December 2024, India’s top eight cities have more than one million unsold real estate units. Clearly, people are not buying at unaffordable prices, especially when income growth remains uncertain. Rental yields, which measure rental income as a percentage of property value, are well below 4-5 percent in most cities, except for a few micro-markets. In fact, your money would earn better returns in a bank fixed deposit.
The scenario in the commercial real estate sector is even grimmer. Reliance Retail shut down 80 stores last year, just two years after opening them. Zara closed its high-rental store in South Mumbai because the business was not covering the costs. Commercial real estate is a truer bellwether of the property market, for, unlike ordinary home-hunting middle class individuals, it is business returns that drive prices, not sentimentality.
