Anshul Jain, CEO - India, DTZ International Property Advisers opines on what to expect in the commercial and residential space in 2009
Forecast for commercial property
The liquidity crunch and falling demand has constrained fresh supply, which will be up to 58% lower than the announced pipeline expected to hit the market by 2010.
Absorption is lower than the average of the past seven quarters and vacancy levels are expected to go up by 30% - 40% across all cities.
We believe the turning point will be during July - December 2009. By this time, rising vacancy levels would have put substantial pressure on developers to reduce prices.
This will trigger an increase in absorption activity, which will be led by prospective tenants and bargain hunters, who were waiting in the sidelines for the market to bottom out.
Grade A office markets will see a revival in absorption activity in the first half 2010. We expect Delhi NCR to lead the market recovery and report the first spurt in absorption activity during Q1 2010 followed by Mumbai, Bengaluru, Kolkata and Chennai in Q2 2010. Pune office market is expected to report signs of recovery by Q3 2010.
Forecast for residential property
The ongoing price correction and downward trend in interest rates is good news for the industry as a whole.
While rentals have seen a mixed trend, prices on an overall level have fallen by up to 25% in 2008 and could fall by another 15% in Q1 of 2009.
In Delhi NCR, prices have fallen considerably in micro markets like - Gurgaon, Noida, Greater Noida, Ghaziabad and Faridabad, and buyers can now look forward to some bargains in the months to come.
Mumbai and Bengaluru residential markets tell a similar tale, with prices falling between 25 - 30%.
The mid-income housing has been the least affected by the current downward trend in prices, and is likely to emerge as the fastest growing segment amongst private developers as well as investors.