Indian real estate sector to witness revival from end of 2009.
“Economic recovery during CY 2010-11 is likely to reinvigorate the interest of foreign investors in India’s real estate market. We expect enhanced capital inflow in the Kerala real estate sector in the medium-to-long-term,” Jones Lang LaSalle said in its report.
Initial yield is expected to show compression during CY 2010-11 and capital values are likely to decline during 2010 before recovering in 2011, the company said in the report.
“Initial yield has already started to show a declining trend during 2009 which is likely to be the case in the near-term. Yield on 10-year Indian Government Bonds is likely to harden due to higher fiscal deficit,” it said.
“Real estate is the single biggest business in the country creating high employment. This business needs to be strongly encouraged for the growth of our economy”, stressed Mr Adi Godrej, Chairman Godrej Group. Viewing affordable housing as garnering good opportunities in the sector, he said that land cost and mortgage rates need to continue to remain at reasonable levels to have developers invest in low cost housing. “Affordable housing can add 1%-1.5% to our GDP growth. Also the need is to have well planned urbanization with clear policies ad regulations.
Sharing his perspectives of the real estate sector, Mr Niranjan Hiranandani, Managing Director, Hiranandani Constructions emphasized that lessons have been learnt by the developers and the time is now ripe to reboot the Indian real estate sector. Talking about the plethora of regulations governing the Indian real estate sector, he called for a transformation in the regulatory system of the country.
The report said although the high fiscal deficit is likely to harden interest rates in the economy, all other macro-economic variables are expected to improve during CY 2010-11 which is likely to induce real estate market recovery after the slowdown of CY 2008-09.
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