India's Real Estate Market: On Thin Ice or a Safe Bet?
Deepak Shenoy, CEO of Capitalmind, warns that India's real estate market, especially flats, is dangerously overvalued and lacks institutional memory of price falls. He cautions against speculative buying and highlights the risk of investing in properties in flood-prone areas.
Real EstateDeepak ShenoyCapitalmindProperty PricesInvestmentReal Estate PuneJun 24, 2025
Responding to the belief that property prices can’t fall, Shenoy posted on X, “We have had extremely long periods of valuation increases in cities, and no institutional memory of a fall in prices (last was 1997?),” he wrote. “Dangerous.”
This warning follows a post that slammed the absurdity of ₹100 crore flats in low-lying neighborhoods, calling it a “false perception of scarcity value” that is disconnected from India’s real earning capacity. One user agreed, noting, “Anything done in EXCESS is bound to go burst.” They argued that as long as GDP growth stays above 6%, prices may not fall sharply, but cautioned against speculative buying. “Don’t buy with a view to sell in 2–5 years,” they advised.
Another user described a brand-new flat in Bengaluru’s Koramangala that remains unsold even as the builder has hiked prices by 10% every quarter. “Builders always had holding power that causes the prices not to crash,” they wrote. This holding power is a significant factor in the real estate market, as it prevents prices from plummeting despite a lack of demand.
Others questioned the actual returns on real estate. One user, who sold his Pune flat after eight years, revealed his Compound Annual Growth Rate (CAGR) was just 4.5%. “If I had just bought ₹20k of HDFC stock monthly instead, I’d have made so much more,” he noted. This comparison highlights the potential for better returns in other investment avenues.
Shobhit Kumar, a user on X, highlighted a grimmer issue: “One of the only places to park black money. Many buyers also ask for a big chunk in cash. It’s a wild wild world,” he wrote, pointing to rampant under-the-table transactions that complicate the market for honest taxpayers.
Shenoy’s warnings are a call to action for investors and policymakers to reassess the real estate market’s valuation and the underlying risks. The market’s overreliance on speculative buying and the lack of transparency in transactions pose significant threats to the stability of the sector. As the market continues to balloon on shaky ground, it is crucial for stakeholders to exercise caution and make informed decisions.
Frequently Asked Questions
What is Deepak Shenoy's main warning about India's real estate market?
Deepak Shenoy, CEO of Capitalmind, warns that India's real estate market, especially flats, is dangerously overvalued and lacks institutional memory of price falls. He cautions against speculative buying and highlights the risk of investing in properties in flood-prone areas.
Why are some users questioning the actual returns on real estate?
Some users are questioning the actual returns on real estate because they have experienced low returns compared to other investment options. For example, one user who sold his Pune flat after eight years had a CAGR of just 4.5%, which is significantly lower than other investments like stocks.
What issues does Shobhit Kumar highlight about the real estate market?
Shobhit Kumar highlights the issue of real estate being used as a place to park black money, with many buyers asking for a significant portion of the payment in cash. This practice complicates the market for honest taxpayers and adds a layer of opacity to transactions.
What is the risk of speculative buying in the real estate market?
The risk of speculative buying in the real estate market is that it can lead to overvaluation and a potential bubble. If the market corrects, speculative buyers who plan to sell in 2-5 years could face significant losses. It is advised to avoid buying with the sole intention of selling in the short term.
What is the impact of builders' holding power on the real estate market?
Builders' holding power has a significant impact on the real estate market by preventing prices from crashing. Even in the absence of demand, builders can hold onto unsold properties and continue to hike prices, which maintains the illusion of a stable market.
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