While it is true that the real estate sector has overcome many blows in 2011, particularly with the high interest rates eating into sales, the new year is expected to breathe a new life into the sector.
“The Indian market is undergoing a short-term correction in property prices, which is actually healthy for the market. This will lead to some revival of buying interest,” Aditya Verma, executive vice-president and COO, Makaan.com, said. He expects a demand revival to happen between July-September 2012.
MR Jaishankar, chairman and managing director, Brigade Group, said he was expecting that for the developers in the city, 2012 would be better than 2011, which itself was a good year overall.
Chief financial officer of Sobha Developers, S Bhaskaran, affirmed this; he said their sales had been improving since April this year.
According to a report published by Makaan.com, property transactions dropped by 25% in Bangalore over the last eight months. Property prices in the city increased by 33.1% when compared with the prices a year ago. Jaishankar conceded that business was subdued in the October-December quarter, but said he expected it to be a passing phase.
Verma said softening of home loan rate would facilitate recovery of the real estate sector. He said they were expecting that the Reserve Bank of India (RBI) would reduce the interest rate for home loans only after February-March 2012. He added that the banks may take a couple of months to lower their rates, which means properties will get cheaper only by May or June.
Modest hike
Unlike markets such as Mumbai and the NCR, which have witnessed disproportionate price hikes, property prices in Bangalore have not seen unrealistic appreciations over the years, owing to which experts feel there will not be much scope for major price correction in 2012.
Although developers are under pressure to reduce prices in a bid to increase their sales, there is not much margin for it. KS Girish, local director, Jones Lang Lasalle India, said owing to increased cost of construction, the builders cannot reduce price by more than 5%-10%.
Industry experts predict that developers might try to lure customers by offering freebies as part of the deal, such as car parking at a cheaper rate, which normally comes with a price tag of Rs2 lakh–Rs3 lakh, or free club house membership, which usually costs about Rs1 lakh.
Source: http://www.dnaindia.com/bangalore/report_2012-will-restore-the-touch-with-realty_1628763
