No sign of real-estate price rise abating: FICCI study

No sign of real-estate price rise abating: FICCI study
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First Published: Thu, Mar 15 2007. 12 45 AM IST
Updated: Thu, Mar 15 2007. 12 45 AM IST
Real-estate prices may rise by as much as 10% in coming months, even though rising interest rates have stoked concern about a potential crash in house prices, according to a new real-estate industry survey by Federation of Indian Chambers of Commerce and Industry (Ficci).
The survey of 24 real-estate consultancy firms, developers, construction companies, builders and financing institutions said that 67% of respondents don’t see an impending market crash.
It suggests that real-estate prices could rise 5% to 10% in the six months after the study was conducted in January. But the respondents also said a correction of 10-15% was likely in certain over-heated areas where there is speculative buying. It did not identify these pockets.
The respondents were optimistic about gains in commercial real estate and in residential properties in smaller cities where property prices are lower and land is available.
Residential real estate, which has benefitted from easy availability of financing and the rising incomes of buyers, is the most preferred segment, the report said. Commercial real estate was also favoured because of the demand for information technology and call centre space and increasing demand for quality space from retailers. However, a lack of clarity on government policy over special economic zones made them the least favoured investement.
India’s commercial and residential real-estate market, estimated at $12 billion (Rs52,800 crore), has been growing by about 30% a year.
In the last two years, foreign companies, including Morgan Stanley, Siachen Capital and the Emaar Group, have invested more than Rs13,000 crore in the Indian real -state market through joint ventures and direct investment in projects.
Ajit Krishnan, partner at Ernst & Young India, said he generally agrees that the residential market in major cities and their suburbs could be heading for a slowdown, not a crash.
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First Published: Thu, Mar 15 2007. 12 45 AM IST
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