MUMBAI: Real estate consultancy Jones Lang Lasalle India (JLL) expects home prices to undergo a of wave of "high appreciation" after six months. Potential home-buyers have a small window of opportunity over the next six months to buy real estate, analysts at JLL said.
Stable demand coupled with affordable pricing, waning interest rates and higher absorption rate will enable developers to keep real estate prices firm, analysts said.
Over 60% of residential launches in the top seven cities -- mostly in cities other than NCR and Mumbai -- are priced in the range of Rs 2000-4000 per sq ft; this meets the demand of middle-income buyers. New project launches have started gaining traction. This should improve cash flows for developers with land banks during 2012, a note issued by JLL said.
"With rising input costs, developers do not want to sell below a threshold which does not justify their minimum replacement returns," JLL said.
The real estate consultancy has ruled out a hard-landing of real estate prices. Despite slow sales, highly leveraged balance sheets, expensive finance in a high interest rate environment and rising input costs, developers have been able to avoid a market-wide crash.
"They have been able to generate sufficient cash flow through the gradual process of price discovery, and several factors are in their favour in the near term," the JLL note said.
"Over the next six months, home prices should witness marginal appreciation. After six months, a second wave of high appreciation is expected," the note summed up.
Source: http://economictimes.indiatimes.com/markets/real-estate/realty-trends/home-prices-to-undergo-a-wave-of-high-appreciation-after-six-months-jll/articleshow/12720902.cms
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