Real estate prices were worst hit
by the economic downturn.
Though the prices have recovered marginally, it will be sometime
before the market actually picks up. Ample liquidity in the economy, coupled
with reduced interest rates, has given the much-needed boost to the sector.
Last year, we saw property prices drop by around 30-40%; however, in the
past three months, prices have not just stabilized, but have risen by 10-15%.
Though the high-growth trajectory of the previous years saw a setback during the
global economic slowdown, the inherent strong economic fundamentals, low exposure
to debt and state intervention would help the sector gradually return to the path
of recovery and witness a robust demand for real estate across the sectors.
The tug-of-war between developers and customers has ended, with prices
of upcoming projects coming down by
25-30% and those of developed ones by 15-20% from the peak levels. In the
residential segment, the strategy has paid off, as there have been clear signs of
demand picking up, albeit at a slower pace; whereas in the commercial
segment, developers have reduced the prices of properties by 40-50% from
the peak levels, but no demand uptick has been seen yet. In a bid to improve
cash flows, most developers have stalled construction of capital-intensive
projects and are directing the funds into projects already under development. Also,
developers have revised the product mix to focus more on development of
residential properties, more particularly in the affordable housing segment in the
near term, as demand is being seen only for these properties.
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