If you are a potential buyer eyeing the Hyderabad real estate market, the COVID-19 induced crisis may feel like a dampener to any investment opportunity. 

The International Monetary Fund (IMF) signaling that the world economy is under a recession will only make one even more cautious.

So, does that leave any scope for a real estate buyer to turn the COVID-19 recession into an advantage? It does!

If you have enough liquid funds at your disposal or have means to manage a bank loan to fund your dream home buy in Hyderabad, our team at Property Adviser suggests the following tips.

Keep Your Eyes Open:

For those with funds at your disposal, recession provides a good enough time to invest in real estate, especially in ready-to-occupy units as the risk-factor is low for them. 

What’s the expected percentage drop one can wait for ‘favorable’ real estate prices in Hyderabad to set in? 

The real estate prices may drop up to 20 percent in India, opined HDFC Chairman Deepak Parekh while addressing real estate stakeholders in a webinar conducted by National Real Estate Development Council (NAREDCO) recently.

There’s a rider though as one may not expect much of a ‘price reset’ or a shake-up on real estate prices in Hyderabad.  Reason: When compared to the national market, land rates in Hyderabad are already low.

Industry insiders, however, do not rule out good deals and bargains for the early birds i.e. the initial real estate buyers post the COVID lockdown.

Advantage Low Interest:

If your preferred mode of real estate investment during the COVID-19 induced recession is through a bank-funded housing loan, the best time to exercise this option is now. Reason: Low-interest rate is here to stay for quite some time.

While opting for a lock-in interest rate has its advantages, most banks offer a floating interest rate on the housing loan but that would be still good.

Reason: The interest rate on housing loans are now down as the Reserve Bank of India (RBI) stimulus package for banks with “Repo Rate” (the rate at which RBI lends to commercial banks) cut to revive the economy would ensure interest rates become affordable.

For now, home loan interest rate has fallen below 8% after RBI's stimulus package but industry experts believe loans would continue to become cheaper in the coming days.

Delayed EMI Scheme

If you are not sure as to how long the recession will last but still would like to take investment risk with a ban loan to gain from the falling Hyderabad property rates, what do you do?

This is a scenario that calls for delayed equated monthly installments (EMIs) scheme that some banks offer. 

Under this scheme, there is a pre-agreed moratorium period (ranging between 36-60 months) during which no EMIs are required to be paid. The EMIs are supposed to begin after the end of the moratorium period, which would thankfully help one to sail through the turbulent recession.

Low to High EMIs

This is another option offered by some banks that can be explored to withstand the uncertain recession period. The EMIs stay low in the initial period but increases after a couple of years.

Which one of the above tips may work best for you? There are no hard and fast rules but the ideal thing for a buyer is to keep a tab on the Hyderabad real estate trend, wait for the right time and make your move.

By: Prabeer Sikdar