Long Term Prospects Of Real Estate

With growing foreign investments in the country’s real estate market, long-term prospects of the sector look brighter, HDFC Chairman Deepak Parekh said.

“Long-term prospects of commercial real estate market continue to be positive owing to growing opportunities in sectors like healthcare, hospitality, logistics and education,” Parekh told reporters in Mumbai.

There is sufficient interest from foreign investors to take part in the country’s real estate market through private equity and foreign direct investment routes, he said.

In Q1 FY’09, about 20% of FDIs were in the housing and real estate sectors, he said, adding that the IPO market may take some time to recover.

The housing segment has enormous demand if the pricing is correct, Parekh said. “Given the huge housing shortage it is unlikely that there will be any saturation in the market for a long time to come.”

Advising buyers not to sit on the fence, Parekh said: “If you find the right house, go ahead and buy it.”

Interest rates over a 15-year period would inevitably move up and down. “So do not overstretch on a loan and maintain a sufficient buffer,” he said.

The present situation may call for some consolidation within the real estate sector and perhaps the need to create innovative financial instruments that could support financially distressed developers to tide over (the present period), Parekh said.

3 Comments

  1. Posted September 11, 2008 at 5:12 am | Permalink

    “Buy land, they are not making it any more,” said Mark Twain a long time ago, surely not in India or anywhere else for that matter. But the asset bubble seems to have burst. Blindly investing in real estate thinking that land is finite in supply might not be advisable at the moment. While there will be corrections and recoveries and even growth in certain properties, the time for secular growth is behind us. Therefore, the need to be careful while investing in real estate is important. Now, you could choose the direct method or a via media through several private funds available in India and overseas. But the critical factor to remember is that transparency in India, for real estate deals, is still dismal. The 2008 Jones LangLaSalle transparency index made on a few key factors, namely, performance measurement, market fundamentals, listed vehicles, legal and regulatory environment and transaction process was recently released. While Indian players may have chosen to boost their egos over the fact that our tier 1 cities have shown some improvement, further scrutiny in the matter shows us where we truly stand. While agreeably transparency in these cities have increased over the last two years, where we rank in the world, or even among other BRIC or Asian countries leaves a lot to be desired. If you are investing in funds that are focussed on real estate, you might be presented with some amazing valuation numbers.For more view- realtydigest.blogspot.com

  2. Real Estate Pune
    Posted September 15, 2008 at 4:54 am | Permalink

    ” The housing segment has enormous demand if the pricing is correct ”
    This is the most important point, especially considering the current market conditions.
    I too think that the real estate market will only grow higher in the future… so it is a good option to invest in something that suits your fancy.

  3. Ravi
    Posted December 24, 2008 at 9:49 am | Permalink

    Soon, we can get a “phoren” education at Lavasa, the new hill station near Pune in Maharashtra. The promoters don’t seem to be affected by the apparent slowdown in the economy and the construction is progressing at a brisk pace. Believe there are so many foreign universities being set up – Oxford for executive education facilities, GDST, UK, for a residential IB school. I am looking forward to applying to the Swiss hospitality school supported by Ecole hoteliere de Lausanne in 2010. Hear that Lavasa will be a great education hub; with Symbiosis, Christ University and NSHM and others there could be as many as 10,000 students there by 2010.

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