As the Indian economy slows down, the real estate sector, with its back to the wall, remain gung-ho that prices will not dip any time soon.
In a recent realty event in Mumbai organised by CII, top property developers aired confidence that prices in residential realty would remain high. “There is pressure on developers, but that is because of the delays by the state government,” said Sandeep Runwal, director, Runwal Group, a Mumbai-based developer. “The delays are affecting the prices as it would only increase the cost for developers.” And the costs are likely to be passed on to customers.
According to data compiled by international real estate consultants, about 60% of projects launched in metros fall in the luxury category.
However, private investors seem to be taking a cautious approach, and are only going in for smaller projects with smaller tenure of investment.
“We are treading cautiously and want that the project we invest in is priced conservatively,” said Ramesh Jogani, managing director, Indiareit, a private equity arm of the Piramal Group. “We are giving preference to smaller projects over bigger ones.”
Commercial realty, however, is a different story, with rentals under pressure.
“The situation has improved (recently) as the demand and supply currently match, but if supply increases, there would be a pressure on rentals in commercial real estate,” said Cherag Ramakrishnan, CEO, Equinox Realty, the real estate arm of Essar Group.