Real estate developers in India think the worst may be over as property prices stabilise. Buyers are also returning, encouraged by the government’s decision to provide cheaper home loans.
India’s real estate sector is showing its first signs of stability after a free fall that started last year. A series of interest rate cuts on home loans and a revival in optimism have encouraged developers to start new projects.
Some are even putting a halt to discounts as demand picks up – property prices are going up by 10 to 15 per cent after falling nearly 30 per cent last year.
Naveen Rahja, managing director, Raheja Developers Engineering, said: “For some time, there will be cautious correction and there will be upward trend (of prices). But ultimately, the demand and supply are going to continue because India has globally the largest young workforce whose disposable income is increasing. They will all need houses and places to shop.”
Budget housing, which was rarely considered lucrative, is now the target for developers.
In its recent budget, the government revealed a housing scheme that aims to make India slum-free in five years. Following that, more than 65 developers announced new budget housing projects.
“Government planners were not given appropriate population density so the smaller houses were not facilitated and encouraged by the government. Now, developers have realised the hard way that there is actual demand existing in this segment so everyone is running after that,” said Rahja.
During the property boom of 2007, residential prices went up three-fold in major cities.
Developers have admitted that they made a mistake by focusing on the top 2 to 3 per cent of India’s population. Many are now switching from premium projects to cheaper ones.
But a complete rebound in home sales is still said to be months away as buyers wait for further price correction.
Source : Channel NewsAsia – 27 Jul 2009