By Vivek Kaul – The Vivek Kaul Letter (India) –
For the past ten days, I have been in Delhi. The city as you know, dear reader, along with the post-Diwali smoke, also eats and breathes real estate. Given this, it very normal for two individuals in this city to start talking about real estate (not that it is unusual in other cities.)
In fact, that is precisely what happened to me when I got talking to an acquaintance, a few days before Diwali. During the conversation, I came across a totally new reason behind the confidence that people have in real estate as an investment.
At least, I hadn’t heard this reason before: “Real estate prices in India did not crash post September 2008,” I was told. This along with a spate of other reasons were offered to explain why real estate still is a good investment.
To recount things, the investment bank Lehman Brothers went bust on September 15, 2008, and this started one of the biggest financial crisis, the world has ever seen. It led to the real estate prices crashing across large parts of the world. Nevertheless, the real estate prices in India did not crash.
They did fall, but they recovered very quickly and another rally in prices followed. This, as I mentioned a little earlier, was a reason offered to me recently, defending real estate as an investment.
The question is why did this happen. Why did real estate prices in India not crash? How did India manage to beat a global trend?
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