Analysis Of Market Sentiments of Indian Real Estate

There are a lot of speculations spreading in the air regarding Indian real estate among the population. Some says there is a bubble in the reality sector that is about to burst, some are expecting the correction in prices while others are forecasting a five percent rise in real estate prices in the fourth quarter  this year. The truth is that nobody can forecast future and it is always full of surprises. If we see the present scenario the real estate in India took an upward direction after the fall of 2008 the year which showed the global economic recession. Once again the world economies are stepping towards recession and in such a situation it is natural to expect a correction but uncertainty is still there.With the increase in interest rate once again how the real estate market is affected? It directly affected the sales. The sales have diminished and the absorption rate has changed. The third quarter of last year 2010 has shown steady growth and the same is seen in the last quarter of 2010. Even the first quarter of the current year 2011 has given progressing results of sales. But the second quarter has shown a fall in the sales of new units in real estate. It can be associated with affordability issues as the prices of properties are sky mounting due to inflation and increase in construction costs. Apart from that the borrowing costs is becoming a burden for the buyers  who are expecting to face cash crunch due to increased EMIs as a major portion of their monthly pay. As per the report published in Morgan Stanley the sales in real estate all over India have seen the fall of average 10 percent in the last three months that can be an indicator of effects of global recession in current time. If we see the statistics and compare the results of last two quarters then we can see there is a gap of 3000 units which shows the fall in demand in property around the country. If we talk about Pune the things are not that bad in here as compare to other places. May be the scenario can change in the coming two to three months. The absorption rate in Pune is the highest that is 20 percent as compare to an average absorption rate of country has shown a fall from 17 percent to 14 percent. The absorption rate can be calculated by dividing the total new sales of units by total unsold units of home. Mumbai has witnessed the lowest rate of absorption of just 6 percent. We can blame to unaffordable price levels for this situations. Not only the high prices but also the cost of loan is contributing to the lack of sales. Buyers are expecting a price correction as they think that the prices have touched the top and it is time to take down turn soon. These kinds of sentiments are driving the market.The other side is of developers who are in a rush to sell the units of inventory in order to minimise their unsold inventories before the down turn starts. That is why pre launch offers are getting popular. Some big project builders are facing cash crunch due to cost of material, inflation, difficulty in raising money from banks and financial institutes, low sales due to market sentiments, etc.  The situation is getting worse in other parts where developers have to sell their land assets to complete their ongoing projects. DLF who is one of the biggest real estate players in India is among the big developers who sold their land assets to cover costs as the banks are becoming cautious and selective in lending money to borrowers. DLF is planning to sell more lands worth thousands of crore to raise funds. Banks now prefer those borrowers having good track record of repayment and credibility. The developers especially small one are cutting on margins of profit in order to boost sales from 30 to 50 percent in boom time to just 5 to 10 percent that is huge cut from their side. According to a research it is expected that the margins will remain under pressure in coming time of three to six months. The absorption rate may increase with lowering the margins by the developers.The construction rate is also declined in the country due to many reasons including sales decline, inflation, price movements, delay in approvals from government authorities, etc. The pre-sales has significantly dipped in the current quarter as compared to previous quarter of new residential projects in Mumbai. Unitech and India bulls also faced the same problem of sales decline and thus the scenario has affected the new constructions.  In short we can say that the interest rate, RBI’s revised lending rates, market sentiments, price escalation, global economical fluctuations, poor stock performance, government policies are some of the factors hitting the real estate industry badly.  Coming quarter will decide the growth path for Indian real estate market.Ruchi Mahajanзайм на карту без отказов круглосуточновзять кредит онлайн