Realty set for recovery from end 2009
INDIAN real estate is expected to enter the recovery phase by the end of 2009 and macro-economic and sector-specific factors will act as catalysts in this recovery, a leading real estate consultancy said.
"Economic recovery during CY 2010-11 is likely to reinvigorate the interest of foreign investors in India's real estate market We expect enhanced capital inflow in the real estate sector in the medium-to-long-term," Jones Lang LaSalle said in its report. Initial yield is expected to show compression during CY 2010-11 and capital values are likely to decline during 2010 before recovering in 2011, the company said in the report.
"Initial yield has already started to show a declining trend during 2009 that is likely to be the case in the near-term. Yield on 10-year Indian Government Bonds is likely to harden due to higher fiscal deficit," it said. The report said although the high fiscal deficit is likely to harden interest rates in the economy, all other macro-economic variables are expected to improve during CY 2010-11 which is likely to induce real estate market recovery after the slowdown of CY 2008-09.
According to the World Economic Outlook Report by IMF, the world economy is likely to contract by 1.4 per cent during 2009. While advanced economies are expected to contract by 3.8 per cent by the end of this year, emerging and developing economies are likely to grow by 1.5 per cent India and China are expected to grow by 5.4 per cent
"India and China are expected to witness a robust recovery with increase in real GDP growth from CY 2008-09 levels and Indian economy is expected to grow at 5.4 per cent during 2009 (the second highest in the world after China, which is likely to grow at 7.5 per cent)," the report said.
Fiscal deficit in India leaped from 3.1 per cent in 2007 to 6.1 per cent in 2008 and is further expected to inch up to 6.4 per cent during 2009, it said.
Another online portal has said both property seekers and builders were affected by the global slowdown. While builders were unable to raise capital for their projects, property buyers on the other hand were deferring purchases due to job uncertainty and doubts about the future prospects.
In its survey, makaan.com, found that the real estate sector was now reacting to recovery in the economy. It also sought to find put whether the skepticism to buy a new home was actually a result of the slowdown or was it just a panic wave created by it
Brokers and realtors were found to be upbeat about recovery of the sector. An overwhelming, 79 per cent national respondents feel that the sector has revived in the last three months. This scenario is echoed in both metro as well as the non-metro cities. .
Affordable housing emerged as the need of the hour and 66 per cent respondents confirm that majority of homebuyers in the present times want to buy property in the sub-40 lakh segment Respondents in metros too feel the same. However, there exists a sizeable demand for the mid-segment (Rs 40-75 lakh). The luxury segment (over Rs 75 lakh) continues to have fewer takers.
A ready to move in home is the flavour of the season. With builders not able to deliver projects within stipulated time, property seekers are taking a rather cautious approach and prefer investing in ready to move in apartments. A whopping 54 per cent respondents believed that maximum demand amongst property options is for ready to move in apartments.
Top items on the checklist while choosing a house were budget followed by location. The survey was conducted in leading metros and tier II cities on the portal between August 11 and 20 and saw participation from over 3,200 brokers and realtors.