REAL ESTATE LOOKING FOR BOUNCE BACK IN SOME NEAR FUTURE

MARCH 2009

As the market sentiments are still at the bottom line, the Indian real estate sector with all the fundamentals in fact, is likely to bounce back in same near future. Actually, our economy slowdown was caused by the global recession, still inching towards touching deep depression if corrections are not applied immediately by the develope nations.

However, in India the investors and buyers are still watching the market with anxiety. Untill then, they can hardly be blamed for keeping themselves away from the real estate sector. For fear of loosing their money amidst slowdown market and credit crunch, the uncomfortable feeling is gripping them and rightly so.

During the property boon period of four years, the developers, buyers and investors were the main actors in keeping the market sentiments high. The government’s intervention was negligible. Since the collapse of banking sector in US as natural corollary, India banks have squeezed themselves to be a passive players in leaving the real estate sector in high and dry, triggered a grim situation. As such, the paucity of liquidity caused by banks in the market and the collapse of stocks aggravated the grim scenario, causing a kind of panic equally among investors and developers.

As the market is likely to remain subdued and sluggish for a little longer, the government’s intervention is expected to raise to the level of credit absorption by increasing the money supply. As such the bail out package to the tune of Rs 3 lac made available by the government to the banks to infuse liquidity in the market, may boost the loan availability and that too on lower of 8 percent interest.

However, the outlook of the developers needs to be changed market sentiments and deviate from the price level at pre-recession level. At, last, the mass production of houses need to be on affordable level. At present, the supply has out-matched the demand side in residential and well as commercial sectors. The grim scenario may not last longer than expected the developers should redesign their whole spectrum of real estate sector based on the reassessment of the market sentiments. That would help the developers to bring the buyers at lower or middle level segments under their umbrella.

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