No Boom Expected in Real Estate, Sector will Witness Robust Growth despite Slowdown

Published: August 17, 2011

The real estate sector is expected to remain robust despite the global slowdown , but it’ll not witness the kind of price appreciation it has seen in the past. Anuj Puri, chairman & country head, Jones Lang LaSalle India, says mid-income residential real estate seems a good investment option. For long-term investors, the residential real estate sector is a lucrative proposition. But, Puri says investors should avoid ploughing money into projects in the early stages of completion, because these may suffer delays. The safest options are ready projects .

Experts say the economic uncertainty may impact the Indian real estate market but it won’t be severe. The domestic economy is resilient and its fundamentals remain strong, Anurag Mathur, MD, Cushman and Wakefield, says. The impact of the global slowdown could be felt in the IT sector, which might impact demand for IT-specific office space, Puri says. But demand for other office space segments would continue to look good in the long term. The slowdown coupled with a funds crunch for the real estate sector may force cashstarved developers to sell projects to reduce debt. Many of them have borrowed at huge costs upward of 18%. This, Puri says, could lead to a dip in residential space prices in cities such as Mumbai.

According to Morgan Stanley , even if the global slowdown hits economic growth of developed countries by one percentage point, the Indian economy will clock between 6.5% and 7% growth in 2011-12 against its original forecast of 7.8%. In the worst case scenario , the Indian economy will continue to grow at roughly 7%. Even then, fresh real estate demand will be there. There could be some oversupply but in the medium to long term, investment in real estate will continue to give a net positive return, higher than inflation.

Source: Indian Realty News

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