Mumbai, Mar 11 (UNI) The lucrative real estate market may not remain as profitable for private equity investors or developers as it has been in the past two years, market analysts at a brokerage firm here said today.

''The higher dividend distribution tax and the 12.36 per cent service tax on commercial rents, imposed by the Budget, will eat into the returns of investors. Over and above that is the factor of surging land prices, which have sharply reduced the margins of developers,'' the analysts at Angel Broking pointed out.

Even though the supply of commercial and residential property is abundant this year, returns on real estate investments are likely to fall, they said.

Mumbai alone will see 9.1 million square feet entering the market. Though nearly 40 per cent of the office space is estimated to have been already pre-leased to tenants, developers expect prices to fall, with so much supply entering the market, they observed.

Besides, returns on property for the investors will also be hurt by rising construction costs for developers and also due to higher interest rates for genuine home buyers. This is bound to hurt the buying sentiment. Ultimately, this will lead to a correction in the unreal real estate prices, the experts predicted.

UNI