Real Estate Industry Predict Growth

Affected by slowdown and reported corrections in prices, the country’s real estate industry predict growth in the long term despite costly home loans and lack of funding for realty projects.

According to a most recent study by Ernst & Young and FICCI on the country’s real estate scenario, about 62% of the respondent developers expected the industry to grow in the long term despite a correction in prices by about 10-15% in the previous year.

Giving highlights of the report, ‘Realty Pulse’ to be released on September 10, Ernst & Young Partner and Leader Ganesh Raj said, “There has been a slowdown in demand and some correction also happened by about 15-20%. But this is momentary, the market will surely bounce back.”

Healthcare infrastructure, logistics and warehousing and affordable housing would hold significant growth potential in the Indian real estate sector, he added.

“The temporal slowdown in the market will be followed by sustained activity as a result of innovative formats, new geographies and flexible pricing and delivery mechanisms. Given the growth in residential housing, organised retail and hospitality industries, the sector is likely to see increased investment activity,” Raj said.

The report pointed out that respondents believe genuine end-users had ‘taken over’ from the investors and account for about 80-90% of sales in their current projects.

“Respondents expressed mixed reactions with regards to land valuations. Most of them seem to be reaching a consensus that land values are likely to see stability over the short to mid-term and may not witness any appreciation over the next 12 months,” it said.

One Comment

  1. Posted September 5, 2008 at 1:23 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.For more view-

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