The economic downturn of the past year could well be history for real estate and the New Year could be the turning point, going by what industry professionals have to say.
After a near two-year tepid run, according to Sushil Mantri, the new President of CREDAI-Karnataka, “it is good to see the industry getting back on its heels.”
“But the dampener for projects taking off right now is the exorbitant cement rates that could pinch both builders and the property buyers. That has to be tackled,” he said.
Whether it is the rising cement prices that have pushed up property prices or consumer demand that is helping the industry go in for a correction, real estate now is heading towards brighter days.
New projects
At least 25 big and medium players in the city, all of a sudden, have their hands full with residential and commercial projects.
Walk into Gopalan Enterprises and you hear officials saying all their 200-plus flats in their new projects are booked.
The developer's mall on Bannerghatta Road, held up for the last three years, is being given the finishing touches.
Another big player, Sobha Developers, has 12 million sq ft of built space to handle this year, and has, in the last three months, flagged off three major projects.
“Certainly the real estate industry has crossed the gloomy recession days,” feels J.C. Sharma, Managing Director, Sobha Developers. “The economy is growing at an 8.+ rate that has a direct relation to real estate. While we are seeing the old inventory vanishing, demand is back and we are gleefully taking up building newer spaces,” he said.
Says Dinesh Verma, Managing Director, ACE Group, which builds educational institutions: “Owing to its essential nature, institutional architecture is never badly hit. But compared to the recession years, there are more sprouting now. We have taken up building five institutes in the last three months.”
Most industry professionals are of the opinion that it was the “affordable segment” that kicked off the buying trend, mainly in the last three quarters, well in tune with the economy looking up. Along with banks lowering their rate of interest for housing loans, increased IT recruitments and improved salaries in several other sectors too have contributed to the overall buying trend.
Big investment
Tata Housing Development plans to invest over Rs. 2,500 crore in the affordable and value homes segment by 2011, in the wake of the overwhelming response it received for its Shubh Griha project that is envisaged to be an integrated township.
“It reflects the bullish market, transactions are definitely happening,” says Farook Mahmood, Managing Director, Silverline Realty, offering international realty solutions.
“The piled up stock is being released and builders are seeing volume sales now. Even the 30 per cent increase now will soon be a dream after December 2010, when the market is expected to see a turning point.”
