Reality of Jaipur Real Estate

We have taken a long time in writing this post for our readers. Being our place of origination, Jaipur deserves special attention in our analysis. Property market of Jaipur has become an unsolved puzzle for real estate experts now-a-days. Let’s see how.

Current Scenario

Right now the property market is touching skies in the capital city of Rajasthan. Land, although available in plenty, is becoming scarce partially due to the increasing investors’ population and partially due to the artificial scarcity created by the realty giants. Once famous for its beautiful bungalows & villas, Jaipur is rapidly getting covered by the high-rise buildings and apartments. The beautiful and calm city-culture of Jaipur is swiftly getting replaced with fast-paced metro-culture. Last 10 years have proven to be a game-changer for the city of Jaipur. In this post we will try to discuss some of these aspects.

Reasons for abrupt change in Jaipur

The dramatic change in Jaipur story as discussed above may be attributed to following aspects:

• Rapid urbanization
• Growth of Industrial Parks
• Development of new SEZs
• Highways & other Infrastructural advancements
• Proximity to Delhi NCR (Gurgaon-NOIDA-Faridabad)
• Immigration of several MNCs
• Investments by NRIs

All these coupled with various other factors like increased employment opportunities have paved the way for Jaipur Real Estate to experience an amoebic growth in last few years.

Creation of a Realty BUBBLE?

If someone tries to compare the Jaipur property prices of 2005 & 2014, he will undoubtedly allege Jaipur of being covered by the property bubble. But is it the reality? – The answer according to us is – NO. We couldn’t see any formation of any asset bubble or obnoxious growth of land prices. We agree that the current market rates are very high, but we believe that they are still not overpriced; rather it is their potential price level.

The kind of infrastructural facilities and standard of living that Jaipur offers, justifies its property price-levels. After all one can’t ask for all the awesome infrastructures and yet wish to keep paying the same prices for land forever!

Also, the development of inner and outer ring-roads around Jaipur has eased the commutation issues and increased the accessibility of all the corners of the city.

Where will the land prices move in future?

Although a tough-nut to crack, we trust that the land prices will continue seeing the sky route, especially after the elections which have resulted in the change in the government. History is evident that with this government, the land prices boosts automatically in Jaipur!

Closing Remarks

Although with our analysis and our intuitions we can say that Jaipur property market will boom further in coming future, we request our readers to so their own research before making any investments in this market.

------ Thanks for reading RealT Horizon :) ------

G+2: An Emerging Real Estate Model

As we said in our earlier post that we went to the fields in Jaipur to explore this sector further, today we share with our readers a prevalent model in this space. During our visit to actual sites and meeting with various people closely associated with RealT, we came across a model that is highly prevalent in Tier 2 cities at present. Let’s share some insights on this topic.

What exactly is G+2?

Due to recent developments, Tier 2 cities have stringent land by-laws. These laws restrict unplanned and uneven growth of these cities which are on their way to become mega cities. One such by-law restricts the vertical growth of town to a certain limit, based on the size of plot and width of the road on which the plot is located.

A typical G+2 construction

Paying full respect the laws, Builders & Developers have devised an alternative to make optimum use of the available plot and have come up with the concept of Ground+2 floors. Now depending on the designs prepared by the Architect, Builder can erect 4-6 flats on that small piece of land. Generally these plans are designed in a way that there is ample space for parking of 4-6 vehicles alongside the building. If the dimensions of plot doesn’t allow ample parking space, Builder can even go for Stealth floor for parking. Even in this case, the next 3 floors will be counted as G+2.

G+2 with stealth floor

Benefits of G+2

• Ideal for mini-builders
• Cost of construction minimizes due to economies of scale (multiple constructions on the same piece of land)
• Pretty good profit margin
• Easy to sell
• Time-to-complete the project is small

Why is it lucrative for mini-builders?

Small Investors and new entrants prefer this model of RealT so much so that you would see hundreds of such projects going on in Jaipur all around. The reason being:

Low cost of Entry	These projects can be initiated with relatively small amount of money as compared to traditional huge projects.
Minimized Risk	Even if all the flats are not booked, the builder is safe as he is sitting on a valuable asset.
Funding Operational Costs	The operational costs of next floor can be funded by the bookings of previous floor.
Controlled Expansion	The builder is free to pull back from going deep into the project at any time.

Closing Remarks: Want to foray into Real Estate? – Go for the above model, but don’t forget to do a proper market analysis for demand side!

---- Thanks for reading. Your comments will help us improve our analysis. J ----

Turbulence Revisited?

Some of our readers must be wondering why we stopped writing further! What happened after our post – ‘Risks in RealT Sector’ that we discontinued our regular practice of giving opinion on RealT matters?

To be honest to our readers, we moved out from the Web-World to the RealT-World to gain some hands-on, first -hand experience. And we are not-so-happy with what we experienced in last 1.5 months L

The RealT market doesn’t provide very rosy picture in the Real World. We stuck to our ideology and started with a fast emerging tier-2 city, Jaipur (Rajasthan, India). We surveyed, researched & roamed around the barren lands of the city in a heat of 46-degree Celsius [:O] But the results of our survey & research were even more horrifying than this heat! Here we go with the overview of our findings:

• Sudden awareness of the anticipated-growth in Jaipur RealT Market in Investors & Developers
• Tremendous increase of Supply in the form of land, flats & colonies – resulting in the mismatch between Demand-Supply curves
• Abrupt & obnoxious increase in the property prices
• Liquidity crunch – both among the suppliers & buyers: resulting in the infinite deadlocked loop
• Stringent policies by the Jaipur Development Authority (JDA)
• Illogical and unexplained formation of local colony association, restricting new constructions in the existing colonies
• Movement out of Jaipur in a radius of 30-40 kms in hope of future investment returns

With all the above points and many more to add to them, the RealT Sector in Jaipur seems to be going through a very turbulent phase currently. This state of the market reminded us of the sub-prime crisis of 2008 and we couldn’t help but get goose bumps. This picture somehow gave us an indication of formation of a property bubble in Jaipur.

This may just be the formation of a bubble, but the scenario has turned to be pretty horrendous right from its beginning. Going by our principal of calculated risk taking and doing a sustainable business, we returned to our RealT Web World, waiting for things to take proper shape. Will you?

Disclosure: No stands in Jaipur Realty Market.

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