Kochi, Aug 12 (UNI) Builders and property developers are hopeful that the
present ''stagnation'' in the real estate market in the country would be over
soon.
Admitting that there was a ''glut'' in the real estate market right now, with
several high-priced properties lying vacant, the builders hope that the
doldrums would be over soon.
''We are hopeful of tiding over the lull in another 10 to 12 months,''
Builders Association of India (BAI) Vice-President Cherian Varkey told UNI here.
He said the rising interest rates from mid-2006 had resulted in a slowdown in
housing loans and the purchase of new properties.
''But, with new infrastructure projects being announced in tier II cities such
as Kochi, we expect there will be a rise in demand for both residential and
commercial space in one to two years' time,'' he said.
According to PRHUB Integrated Marketing Communications Ltd CEO Xavier Prabhu,
cities such as Chandigarh, Indore, Kochi and Kolkata were emerging as new
destinations for real estate development.
For instance, Kochi had witnessed a 35 per cent growth in the real estate
market in the last year, he said.
However, according to officials in the LIC Housing Finance Ltd (LICHFL),
property developers in cities such as Chennai had taken a hit as a large number
of posh properties were lying unsold in the southern metropolis.
''Enthused by market research studies which estimated the housing demand in
the country to touch 80 million units in the next 15 years and the real estate
market to reach US$ 60 billion in 2010, compared to US $16 billion in 2006, a
large number of projects were started in Chennai. However, there are few takers
for these apartments, which the customers find over-priced,'' the officials
said.
On the other hand, cities such as Hyderabad, Bangalore and Delhi were better
placed with a higher demand for real estate, they added.
In the long run, though, the real estate market would be bullish and even
LICHFL was planning to float a realty fund to finance residential complexes,
shopping malls and infoparks, they said.
According to Vijaya Bank CMD Prakash P Mallya, if inflation remained contained
to less than 4.5 per cent, lending interests may come down by a quarter or half
point in the next two to three months.
However, he said the bank had decided to moderate its credit to commercial
real estate ventures to avoid speculative tendencies.
Stating that real estate developers were even now willing to take loans at
interest rates of 14 to 15 per cent, Mr Mallya said ''we do not want to
encourage speculative tendencies.'' UNI ARC AJ YA VC1045
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