Despite the slowdown in the global economy, the demand for residential property in India will remain strong, according to real estate consultants.
The industry though will see a significant slowdown in capital appreciation and the price rises of recent years are unlikely to be seen again for some time.
The current global slowdown that has created concerns about a double dip recession will have positive as well as negative impact on the Indian real estate sector, experts believe.
One the one hand it makes prices more accessible and on the other is means investors will need to accept lower returns.
Anshuman Magazine, the managing director of CB Richard Ellis, said that on the whole, because of the domestic demand driven market, the recent developments in the international front will provide good opportunities to homebuyers to fulfill their aspirations to own a house.
Despite slowing, the Indian economy is still expected to grow at a healthy rate of 7.5%, which will not only reduce the impact of the global slowdown but also make it one of the most attractive investment destinations in the world, along with China.
Anuj Puri, chairman and country head of Jones Lang LaSalle India, says that middle-income residential real estate makes a lot of investment sense. Thus, for long-term investors, residential real estate is quite a lucrative proposition. However, Puri advises investors to avoid putting money into projects that are in the early stages of completion since these may be plagued by delays now. The safest bet is projects that are ready or almost ready, he said.
Anurag Mathur, the managing director of Cushman and Wakefield, India, also said that Indian real estate market may be affected, but to a lesser extent. The economy, though closely linked to the global developments, is resilient, he added.
The slowdown in the economy coupled with relatively unavailability of funds may force many cash starved developers to sell their projects to reduce their debt. Many of these developers have borrowed at a huge cost of upwards of 18% to meet their immediate requirements. This, said Puri, may lead to a dip in residential prices in cities like Mumbai.