Lack of funds delaying realty projects in India: CBRE

Lack of funds delaying realty projects in India: CBRE

New Delhi: Real estate projects in India are getting delayed due to paucity of funds, even as developers struggle to cope with decline in sales volume across residential, office and retail verticals, CB Richard Ellis (CBRE) said in its latest report.

“Domestic credit control measures have impacted the availability of funds for developers and delayed project timelines and schedules," CBRE Chairman and Managing Director (South Asia) Anshuman Magazine said.

In its latest report on investment scenario in Asian property markets, CBRE pointed out that sales in all the three major verticals—residential, office and retail have further declined during July-September quarter.

“Transaction volumes in the residential, office and retail sectors, which had already begun to slow earlier in the year, further tapered off during the third quarter," the report said.

CBRE said that the real estate investment market in India continued to remain subdued amid economic worries.

“High interest rates and inflation have negatively affected investor demand," Magazine added.

Discussing about the Chinese realty market, CBRE said that the country witnessed sizeable drop in transaction volumes in the residential sales market in the third quarter of 2008, which forced a number of developers to discount their asking prices to encourage sales.

“Despite the overall success of the Olympic Games, investment sentiment softened dramatically in response to significant corrections in the stock market," it added.

On overall Asian property market, the consultant said that the sentiment was affected considerably during the third quarter of 2008 as the worsening global financial markets further impacted capital flows into the sector.

“Preliminary data shows investment volume down across the region," CBRE said.

It also said that the regional investment market has been changing from being a buyers to a sellers market as a rising number of sellers come under pressure to dispose of real estate assets in exchange for cash in order to shore up balance sheets and replenish liquidity.

“Highly—leveraged investors have largely stepped out of the regions investment markets, while core investors, including pension and sovereign wealth funds, have been hesitant to increase their exposure to commercial property under the present market conditions.

CBRE said that the outlook for the investment markets is expected to be difficult, but opportunities remain for buyers looking for distressed sales.