Crisil reporting accurately on the state of the housing market in India.
>>> Real estate companies have been launching newer residential projects at lower prices that >>>are located in "far-flung" locations (exhurbs) from the central business districts of cities. The Reuters article is below.
This statement is 1000% true. We see launches in Kalyan, Virar, Boisar in Mumbai which are 3 hours away from business districts. It makes no sense to commute 1/4 of your life every day and still be under the duress of loans. Life is more then loans and commute. Builders have bought land at sky high prices in the Mumbai suburbs and the only way out for them is an increase in FSI. I think in the coming years the Maharashtra govt will do just that. Prices will drop to more sober levels once that happens. Anyone buying at 8k per sq/ft will be rueing the decision for the rest of the loan life.
India's residential sector likely to see oversupply - Crisil
MUMBAI (Reuters) - India's realty companies will struggle to find buyers for about a fourth of their residential space between 2009 and 2011, the research arm of rating agency Crisil said in a report on Wednesday.
During 2009-2011, Crisil Research said it expects absorption of 506 million sq. ft. over the three years based on its expectation of a GDP growth of 6-6.5 percent in 2009/10, according to its study of 10 cities across India.
Although planned supply has been estimated at 1,202 million sq. ft., this supply "is unlikely to materialise in full due to the credit crunch and relatively sluggish demand," and the actual supply will be around 700 million sq. ft., it said.
This indicates 28 percent will be in oversupply while much of the planned projects will be delayed by up to two years and others in the planning stage, shelved.
Indian real estate saw demand for housing collapse in the second half of 2008 amidst a global credit crunch and the local market became stressed with buyers fearing job losses, Sudhir Nair, head-Crisil Research said.
The market is expected to stabilise in 2010, he added, "the Indian economy will stabilise and start accelerating and there will be stability in the global economy and fund constraints will be eroded."
Builders had also reduced unit sizes and cut prices, which will help stabilise demand, he said.
Residential prices are expected to fall further by 8-10 percent in 2009 before stabilising the next year and Crisil Research expects investors to maintain a cautionary approach until values stabilise, it added in the report.
Real estate companies have been launching newer residential projects at lower prices that are located in "far-flung" locations from the central business districts of cities.
MUMBAI (Reuters) - India's realty companies will struggle to find buyers for about a fourth of their residential space between 2009 and 2011, the research arm of rating agency Crisil said in a report on Wednesday.
During 2009-2011, Crisil Research said it expects absorption of 506 million sq. ft. over the three years based on its expectation of a GDP growth of 6-6.5 percent in 2009/10, according to its study of 10 cities across India.
Although planned supply has been estimated at 1,202 million sq. ft., this supply "is unlikely to materialise in full due to the credit crunch and relatively sluggish demand," and the actual supply will be around 700 million sq. ft., it said.
This indicates 28 percent will be in oversupply while much of the planned projects will be delayed by up to two years and others in the planning stage, shelved.
Indian real estate saw demand for housing collapse in the second half of 2008 amidst a global credit crunch and the local market became stressed with buyers fearing job losses, Sudhir Nair, head-Crisil Research said.
The market is expected to stabilise in 2010, he added, "the Indian economy will stabilise and start accelerating and there will be stability in the global economy and fund constraints will be eroded."
Builders had also reduced unit sizes and cut prices, which will help stabilise demand, he said.
Residential prices are expected to fall further by 8-10 percent in 2009 before stabilising the next year and Crisil Research expects investors to maintain a cautionary approach until values stabilise, it added in the report.
Real estate companies have been launching newer residential projects at lower prices that are located in "far-flung" locations from the central business districts of cities.
