Property rates going south, slowly

Property rates going south, slowly
Hindustan Times, April 8, 2009, Page 1

Real estate prices are set to fall the same way they went up over the past few years.

Residential property prices have already corrected by over 25 per cent in the last eight months but have failed to enthuse buyers. This will pull prices down further.

Property prices in key Indian cities will decline by another 35 per cent in the next three years, a report by brokerage firm Edelweiss Capital noted. “Property prices increased sharply over the past six to seven years, rising 3.4 times in normal term (quoted price) and 2.5 times in real term (transaction price) over 2001 prices. We expect a price correction of 48 per cent in normal term and 58 per cent in real term,” the report said.

“Appetite for real estate has diminished significantly with foreign investors; developers are highly leveraged and their inability to serve the debt obligation raises a threat,” it said.

“Prices have fallen 25-30 per cent and have bottomed out in most places,” said Anuj Puri, chairman, Jones Lang LaSalle Meghraj. “Over the next 12 months, expect another 10-15 per cent drop in markets where there’s excess supply and where prices are too high.”

“Prices have corrected by 10-25 per cent,” said Aditi Vijayakar, executive director (residential services), Cushman & Wakefield India. “In high-end properties, it would correct by another 5 per cent and by 5-10 per cent in suburban markets over the next 12 months."

Property brokers are feeling pessimistic. Gurgaon has seen a drop of 25 per cent in prices of ready-to-move properties and brokers say there’s no demand for under-construction properties either. It’s no better in Delhi, Noida and Faridabad.