Lehman Crisis May Pull Down Property Prices

Real estate prices are expected to soften further as the current global financial turmoil would force cash-starved builders to offer hefty discounts. The collapse of financial powerhouses like Lehman Brothers and the consequent liquidity problems will stop the inflow of fresh investments into India’s real estate sector.

According to analysts, the crisis, which comes at a time when the property market is facing a slump, could lead to major price correction in the next one-year. Prices in select markets are already down by more than 20% and you should expect more.

The builders may find the going difficult and offer discounts as the slump is expected to continue for about next two years. Hopes of builders that Diwali would reverse the trend seem unlikely. How much would prices drop? “It’s difficult to put a figure. But demand has come down drastically which is worrisome. It is not even 10% of last year,” said Pranay Vakil, Chairman, Knight Frank India, a global realty consultancy.

2 Comments

  1. Atul
    Posted September 17, 2008 at 8:35 am | Permalink

    I remember my days in Japan, when I used to challenge my Japanese counterpart that India will overtake Japan in few years. I was so proud to be Indian during 2004. But when I came back to India, I saw a big change. I saw a good amount of development, but absolutely in Wrong direction !!!

    Only Real-Estate and Stock Exchange were given priority over all other businesses. Mr. Chidambaram was only worried about Real Estate and Stock Exchange. He forgot that India has to take advantage of IT dollars flowing in Indian Economy to build a strong Base of Manufacturing Quality.

    Why we do not understand the basics of Economic Development? Just welcoming Capital Investment from Foreign countries does not mean Development !! It means that we are creating huge debt to pay back…..

    The foreign investors have come to India not for a Social Services !! They want to earn money. They will earn and take back to their country.

    But meanwhile, we need to use this capital into productive area and not in developing real estates !!!

    We need:
    1. Legal Reforms
    2. Education Reforms
    3. Social Reforms (Remember, we are the worst social animal in the world)
    4. Civic Reforms
    5. Infrastructure Reforms

    Only after we achieve all these, we can achieve economic reforms, in true sense. Else, we will go with global waves. If US sneazes we will catch cold.

  2. Posted September 18, 2008 at 3:05 am | Permalink

    Analysts said the crash in real estate stocks was on account of heavy selling on concerns over future funding for real estate firms. “Real estate shares must be down because of a combination of Lehman’s bankruptcy news and the fact that real estate stocks are traditionally high beta stocks,” Unmesh Sharma, an analyst with Macquarie Research, said. A high beta stock is one that swings more than the market.For more view- http://realtydigest.blogspot.com/2008/09/lehman-merill-crash-affects-indian.html

Post a Comment

You must be logged in to post a comment.