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Indian Real Estate News
Housing Demand to Remain Strong despite Global Slowdown
Source: Aug 19, 2011
Despite slowdown in the global economy, the demand for housing sector will remain strong in the country. But the sector will not witness the kind of price appreciation it has seen in the last couple of years. The global slowdown of economy will have positive as well as negative impact on the Indian real estate sector. Anshuman Magazine, the managing director of global realty consultant CB Richard Ellis, says that on the whole, because of the domestic demand-driven market, the recent developments in the international front will provide good opportunities to homebuyers to fulfil their aspirations to own a house.

Despite marginal slowdown of Indian economy, it is expected to grow at healthy rate of 7.5%, which will not only reduce the impact of the global slowdown but also make it one of the most attractive investment destinations in the world, along with China. Anuj Puri, chairman and country head of Jones Lang LaSalle India, says that midincome residential real estate makes a lot of investment sense. Thus, for long-term investors, residential real estate is quite a lucrative proposition. However, Puri advises investors to avoid plugging money into projects that are in the early stages of completion , since these may be plagued by delays now. The safest bet are projects that are ready or almost ready, he says.

Anurag Mathur, the managing director of Cushman and Wakefield, India, also says that Indian real estate market may be affected, but to a lesser extent. The economy , though closely linked to the global developments , is resilient. Recently, Standard and Poor's downgraded the sovereign credit rating of the US by one notch to AA+. There is apprehension that the development will affect the Indian economy adversely. However, the downgrade of US economy to AA+ does not indicate any impending default by the country in meeting its obligations in the near future, but it certainly hints at a slowdown of its economy. Besides the US, other developed countries in the Euro zone are also facing a slowdown in the economy. This will affect the export of IT services from India, which contributes to the demand for residential and office real estate in the country.

Anuj Puri says that the recent developments in the US and Europe could impact Indian IT companies, and therefore, the overall demand for IT-specific office space. IT office space may therefore not be very lucrative for short-to-mid-term investors. However, other office-space segments would continue to look good in the long term. But, at the same time, there is a section of banker and industry experts which feels that the outsourcing activities will increase as the profitability of companies in developed world will be under stress because of the slowdown in their economies. Slowdown in the economy coupled with relatively unavailability of funds may force many cash-starved indebted developers to sell their projects to reduce their debt. Many of these developers have borrowed at a huge cost of upwards of 18% to meet their immediate requirements. This, said Puri, may lead to a dip in residential prices in cities like Mumbai.
Tag: Real estate in india, property in india, properties in india
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