global economic turmoil means the Indian real estate sector is bound to be affected in the short to medium term. Will this offer good opportunities to those who are flush with cash to invest in the property in India? Some Industry experts give there views.

Cushman & Wakefield
Executive director of global realty consultancy firm, Cushman & Wakefield, Kaustuv Roy said that 2012 will have to be year for the real estate sector due to some factors which will have a far reaching impact.

Tight liquidity
The developers’ tight liquidity position will cause stress not only to the consumers, but also to the banking sector as their exposure is huge. Because of the tight liquidity condition, developers may find it difficult to deliver on time to the buyers.

Uncertainties in the job markets
At the same time, because of the turmoil in the economy, there will be uncertainties in the job markets too. This may discourage the young buyers, who play an important role in the residential realty market. Therefore, Roy said, in the residential sector, there will be high dependency on the Indian corporate performance, and if the economy is slowing down, demand may dry up, which is likely to lead to residential prices softening.

Jones Lang LaSalle India
These developments will not only dry up the future demand but also lead to tightening of liquidity in the sector. In that case, developers will not go for fresh launches. “The absorption rate – meaning the ratio of sales over inventory in the market – is likely to be low, and the incidence of new launches will decline,” said head, Research & Real Estate Intelligence Service, Jones Lang LaSalle India, Ashutosh Limaye.

Further interest rate hikes by the RBI
“Because of the prevailing uncertainties in the global market and the likelihood of further interest rate hikes by the RBI in the early part of 2012, sentiments in the residential market will remain cautious over the short term,” said Limaye.

Cautious optimism
Roy also said that overall, 2012 will be a year of cautious optimism with the hope that the Indian economy is suitably insulated from the western economies. However, he felt, for the sector 2011 has turned out to be a mixed year. The first half of the year was extremely good, but by August, the market sentiment underwent a change, depicting more caution in the air.

High Mumbai real estate prices, can’t be sustained for long and already sales are beginning to slow. Is the Mumbai real estate bubble about to burst or is there more growth?

To give you a more informed view here are the views from Navyroof.com and some leading property consultants in India.

View from Navyroof.com
Overall we feel Mumbai real estate needs to slow as prices are unsustainable in the medium term. If some heat is not taken out of the Mumbai market soon with “a soft landing”, we could see a large Mumbai real estate correction. With a large amount of speculation and high cost of land, prices up over 50% since January. Anyone who has made these quick gains would be well advised to bank them now as this rally cannot continue for much longer at this rate without those investors last to the party getting burnt first. (more…)

Another sector of the Indian real estate market is coming back in vogue. After Indian realtors focused on the affordable housing space, where demand remained reasonable when market prices crashed two years ago, they are now launching luxury homes as the segment is witnessing early signals of an upswing in demand. (more…)

Commercial real estate is hoping for a bounce back in 2010. For 2009 though, the year is ending with a 29% decline in space absorption compared with last year, according to the annual year-end report by real estate consultancy Cushman & Wakefield. (more…)

Indian office rentals are still in demand in Ahmedabad, the city has registered the lowest vacancy of 5-6 per cent in a recent study by Cushman and Wakefield, but Chennai suffers. (more…)

It is reported the Indian government plans to change foreign ownership rules in the Indian property sector. (more…)

The demand for timeshare products in India is likely to grow at approximately 16% per annum from 2006 to 2015, facilitated by supply growth of approximately 12% per annum over the same period according to a report released by Group RCI and global real estate consultants, Cushman & Wakefield. (more…)

Indian developers such have lagged behind by 54 per cent in their target to open retail space even as retailers’ vacancy climbed to 16 per cent in 2008, according to a study. Cash-strapped real estate developers failed to deliver 11 million sq ft of retail space in 2008, according to a study released by Cushman & Wakefield. Out of the proposed 74 malls in key eight cities at the beginning of 2008, only 34 were delivered through the year, the study showed. Developers in the National Capital Region (NCR) lagged the most with a supply of 4.7 million sq ft compared with the earlier target of 7.1 million sq ft. Developers may continue to restrict their supply, or go slow on retail space by a similar amount in 2009 across key major cities, the study showed.

Rajneesh Mahajan, director of retail services at Cushman & Wakefield explained the reason for the shortfall was the mismatch between the potential and actual occupancy. The Indian organised retail sector grew at 25 per cent in 2007. Anticipating the growth of retail sector at above 35 per cent in the coming years, developers had announced big retail projects. However, owing to economic slowdown, the growth of the retail sector has come down to 15 per cent in 2008, resulting in developers deferring their projects for 12-24 months. “From the projected supply of 20.8 million sq ft space in the first quarter of 2008, we will see a spill over of about ten million sq ft development in 2009-10. Lack of funds leading to construction delays and cautious expansion by retailers have resulted in slow absorption of retail space in malls,” said Mahajan.