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Indian Real Estate Sector is Recovering- Ernst and Young

Driven by price corrections, softening of interest rates and improved liquidity, the real estate industry is on the path of recovery on the back of improved demand in the residential segment. “After a rough phase that lasted for over a year, the Indian real estate industry is on the path of recovery. The residential real estate segment, which is leading the recovery, has witnessed a revival in demand, primarily due to improved affordibility,” a Ficci - Ernst & Young report said. The two-pronged strategies of the developers- improving balance sheets and focusing on developing self-funded projects - are now bearing results and helping in the recovery of the industry with a revival of demand in the residential sub-segment.

The demand in the residential segment has witnessed a revival primarily due to improved affordibility and was a result of lower interest rates, decline in property prices and the availability of small-sized affordable apartments. The report, however, said that the commercial, retail and hospitality segments were still struggling due to the subdued demand from the IT/ITeS sectors and multinationals, which are halting expansion plans in the country. “In the aftermath of the global economic slowdown, most reatilers have deffered their expansion plans in India, since the slowdown has resulted in a decline in their revenues and profitability,” the Ficci - Ernst & Young report said.

As developers shifted their focus to self-funded projects due to the liquidity crunch, they deffred and even cancelled hospitality projects that have higher gestation periods. “This has resulted in the widening of the demand-supply gap in hotel rooms in the country,” the report said. Meanwhile, assessing over 60 parameters, the report ranked Delhi, the National Capital, as the most preffered destination for real estate developres and investors. “The key factors that have helped Delhi to retain its number one prositions are the fast-paced improvements in physical infratsructure such as the functional metro railway, modernisation of the Internnational airport, road widening projects and dedicated efforts to make the ring road signal free,” the report said. The financial capital of the country came as a close second, loosing in the infrastructure index to Delhi.

This entry was posted on Sunday, November 15th, 2009 at 10:35 pm and is filed under LoftyVistas, real estate market in India. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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