India's Property Market Is Likely To Drop By 5 Percent

India's Property Market Is Likely To Drop By 5 Percent

By SiliconIndia   |   Thursday, August 30, 2012   |    1 Comments
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Bangalore: India’s real estate market growth is likely to drop below 5 percent over the coming year in contrast to an annual rate of 17 percent from 2007, according to property consultancy firm Jones Lang LaSalle, reports Reuters.

Colin Dyer, President and Global Chief Executive Officer of Jones Lang LaSalle said in an interview to Reuters, "The Asia Pacific property market has paused, and the outlook for India will depend on its political, monetary and regulatory environment."

Asia’s third largest economy witnesses a slowdown in growth at 9 year low which is 5.3 percent due to elevated inflation, hike in interest rates, changes in policy and liquidity pressures, which in turn restricts economic growth. Further, the uncertainty in the market has diluted investor confidence.  

Indian developers are selling away their properties to reduce their growing levels of debts that is coupled with low home sales, slow absorption in office space and retail space which has reduced developers’ profit.

Anuj Puri, head of Jones Lang LaSalle's India business, cited that "The next 12 months are going to be tough," reports Reuters.

Puri also said that "I don't see an immediate change in the absorption of office or retail space unless the government opens (up to) foreign direct investment in (multi-brand) retail.”

According to Dyer, "In China there has been an overall economic slowdown but it is still growing at 7 per cent, and with property prices in major cities starting to correct, we expect the market to pick up (in the) back half of this year or early next year," reports Reuters.

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