Real Estate Market Outlook

The year 2011 was a turbulent period for real estate. Property prices rose, interest prices rose and there were controversies. Global economic conditions affected Indian real estate markets and the declining value of the rupee is certainly not an encouraging factor. There is an overall decline in sales of residential properties. Flow of funds has decreased to a trickle and even FDI has slowed down. The bubble has deflated and indicators are that the residential real estate market is set for a correction in this year. Sales will level off and prices will rationalize according to pundits. Analysts watching the situation are of the opinion that a recovery in the US may lead to a lowering of interest rates. Most builders are saddled with huge debts and unsold inventory. If they do resort to selling at lowered prices, it will be a windfall for buyers. Contrary to indications, property prices have gone up by 20% though volumes have declined to 70%. In commercial spaces there is lot of availability but demand has slowed down. Companies will try to reduce costs and may relocate to special economic zones. Slow sales and a glut could lead to a decline in prices by about 30% according to industry analysts. Developers who were adamant about reducing prices are reconsidering their decision and may reduce prices. Those who had switched from commercial spaces to residential find that this area too is witnessing a slump. The trend may continue for the early part of 2013. Rating agency Fitch gives an overall negative outlook for the real estate sector due to weak demands and increased cost of production.