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Realty fall is now an opportunity

The deadly combination of high interest rates and even higher property prices in 2008 virtually killed the householder’s biggest aspiration: to live in his own house. Sandeep Singh reports.

india Updated: Jan 01, 2009 21:58 IST
Sandeep Singh

The deadly combination of high interest rates and even higher property prices in 2008 virtually killed the householder’s biggest aspiration: to live in his own house. But with the fall has come an opportunity. In 2009, interest rates are likely to fall as the government tries to kickstart a slowing economy. Even better, facing an absence of buyers, real estate companies are likely to begin to cut prices.

“The year 2009 will open up opportunities for investment in real estate as property prices corrected by around 15-20 per cent in 2008,” said Anuj Puri chairman and country head, Jones Lang Lasalle Meghraj. “I expect a further correction by 10 per cent over the next three months. Price stability should arrive by March 2009 and will not climb quickly.”

Investor behaviour too is likely to change. “What happened in 2008 will come as a learning and investors should do their due diligence on any investment plans in any area and go with the long-term investment horizon of three to five years,” said Anshuman Magazine, managing director CB Richard Ellis.

While funding remains a challenge for the real estate developers across the country, experts believe that the Indian market will see a faster revival than other economies. “This is because of the domestic consumption and the high amount of development that is expected to happen,” said Magazine.

But when it comes to options for real estate investment, there aren’t any, other than investing in physical property, said Surya Bhatia, a Delhi based financial planner. “There are no portfolio management services in the offing as of now and even in the physical buying it is more of a wait and watch situation for investors,” he said.

So, while the view is optimistic, investors will have to wait for the coming three to six months before they venture into real estate investment.