Demand
in the Indian residential market is expected to turn positive in 2010 due to
improvement in affordability, steady economic growth and greater liquidity,
says a Crisil research report on the real estate sector. However, the decline
in the currently overpriced capital values of all three real estate segments of
residential, commercial and retail will persist through 2009. Commercial and
retail markets will continue to see erosion of lease rentals in the next two
years, it says.
The
report is an analysis of over 400 areas across 88 micro-markets in Ahmedabad,
Bangalore, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Mumbai-MMR, National
Capital Region and Pune. Mr Sudhir Nair, Head, Crisil Research, said:
“Accelerated growth of Indian economy, recovery of global economy, improved
liquidity and expected fall in interest rates are key factors that will signal
demand revival in the residential segment. This segment is likely to see a much
faster revival due to a strong underlying demand for housing and supply coming
at attractive price points.”
The
demand in the commercial and retail segments is likely to remain under stress
the next two years owing to excess supply and weak offtake, he added. The
report says capital values for residential sector and lease rentals for
commercial and retail properties had substantially corrected till March due to
a slowdown in both the domestic and global economies, and also due to real
estate becoming unaffordable. Kochi, Chandigarh and Pune, which have greater
investor presence as against end-users, saw a greater fall in capital values
compared to other cities. The situation is expected to continue through 2009
and 2010, particularly in the commercial and retail segments. However, Crisil
Research believes that demand for houses will improve in 2010, backed by lower
home loan interest rates as well as better job security owing to higher growth
in the economy.
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