The Indian economy has grown steadily throughout the course of the year but interest rates have also gone up, and this has caused the output growth to decline and capital values have turned negative for the first time since 2009.
The level of financial uncertainty in Europe and America is having an adverse on India. China, Brazil, Russia and Japan are performing better but the uncertainty in the Western markets is affecting the real estate market in India.
Investor interest in India is in decline due to disparity between investor returns and capital values. Ramesh Nair MRICS of Jones Long LaSalle claims many developers in the larger cities are being forced to rethink how they structure and sell their office spaces.
“Many developers, especially in cities such as Mumbai, are today offering smaller units of space (even as small as 500-1000 square feet) in Grade A buildings. This is in sharp contrast to the scenario a few years back, where only much larger units were available. With banks and institutional lenders becoming more cautious about lending to the commercial real estate sector, demand for capital from private equity and NBFC funding has increased” he said.
India has dropped to 19th place for its fourth quarter rental value expectations. This drop of 6 places was caused by available space rising at a much higher rate than the demand for the space.
Source: property-report.com/
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