Property prices to increase 10% in next 6 months
MARCH 15, 2007: Real estate investors worried
by corrections in property prices can afford
to breathe easy. If a Federation of Indian
Chambers of Commerce and Industry (Ficci)
survey on property prices is to be believed,
prices will rise by 10-15 per cent over the
next 4-6 months across tier I, II and III
cities. The survey adds that the correction
of up to 10-15 percent that has taken place
in the overheated segments of the market was
inevitable.
The correction in real estate prices is likely
to be short-lived and confined to some over-heated
locations, where supply is more than demand.
With strong economic growth constantly generating
new buyers, the upward trend in prices will
resume over the next four to six months.
Areas like Whitefield in Bangalore, and Mohali
and Ludhiana in Punjab have in recent times
seen a 15-20 per cent drop in property prices.
The Gurgaon market has been stable for the
past six months. Demand has been flat in Gurgaon
for the past six months. High home loan rates
and stock market volatility have led to consumers
postponing their buying decisions.
The Ficci survey was conducted to assess
the status of the market and is based on feedback
from a sample of 24 real estate consultancy
firms, developers, construction companies,
builders and financing institutions. SBI,
Unitech, Ernst and Young, JM Morgan Stanley,
GE Real Estate and Mayfair Constructions are
some of the organisations that participated
in the survey.
67 per cent of the respondents were of the
opinion that foreign direct investment (FDI)
will contribute to an increase in property
prices. 90 per cent of the respondents felt
that IPOs will help make the sector more organised.
No wonder then that large developers like
Parsvnath, Shobha Developers and Akruti Nirman
came out with public offerings last year,
while Omaxe and DLF are slated to come out
with IPOs this year.
The findings of this survey, however, contradict
a statement made by minister for urban development
Jaipal Reddy in the Rajya Sabha a few days
ago. Replying to a question posed by MP Rahul
Bajaj about whether FDI would lead to an increase
in property prices, the minister had replied
in the negative.
Source: Indian Express
