Experts feel that the residential property prices are likely to stabilise from April onwards, with fear of deflation brooding over the economy. They maintain that the continuous drop in the prices of general goods and services will bring the interest rates down to more affordable levels. This, combined with the recent downward trend in property, may see buyers coming back to the market. The demand has not evaporated. It's waiting to come to the surface, but at the right price, with the right sentiment and with some kind of guarantee that the product will come up in the market, says Pranay Vakil, chairman, Knight Frank India, a global real estate consultancy.

We have various guesstimates ranging from end-2009 to middle-2010 when the slowdown might come to an end, but it must be clearly realised that there is no scientific basis for such estimates. After all, how can one estimate when the 'feel good' factor returns to reverse adverse expectations? Whenever it does, it will offer at least a small rally for some time because of the pent-up demand over the past 18 months, adds Sahni. In anticipation, investors are lapping up property when they believe they can negotiate good deals.

Changed Rules

- Some developers have increased the super area without a corresponding increase in the carpet area, even after the launch of the project.
- Instead of the surety of prices going up, some project launches have seen lower prices than those offered during soft launches.
- Payment for add-ons is not disclosed at the time of the sale.
- Developers now hold on for maintenance income even after project completion.

Before you decide

The prices have been falling and you might be ready to invest in a small city, but should you buy commercial real estate or stick to residential projects? Obviously, the demand and supply position of each sector needs to be examined carefully before you invest. Experts believe that given the demand for residential properties and the smaller investment required here, this sector scores over the commercial and office space. Also, the price correction in the residential sector has been more pronounced in the new launches than in the existing projects.

While investing in smaller areas, it is critical to know the market well. However, timing is equally important if you are buying land purely as an investment; a first-mover advantage helps immensely. Also, while the city suburbs offer affordable opportunities, investments in smaller cities should ideally be within municipal limits. You also need to keep an eye on any new rules and regulations as these can change suddenly. For example, while soft launches almost always meant a low entry price and short-term profits, some developers have now been forced to bring the prices down during the actual launch. Finally, make sure that you take great care while evaluating the size of the property as some developers tend to increase the super area without a corresponding increase in the carpet area.

The bottom line is that some sections of the real estate are still over-priced. Opportunities exist in the smaller cities, but prudent investors should focus on specific sectors or development types when venturing into these markets. The risks and opportunities that exist in the smaller markets are different from those in metros. The risk, when compared to metro cities, arises from lack of enough market information. If you do your homework well, you might find that there are good opportunities waiting to be tapped even now.