Echoes: Property Trends – 2010 and Beyond

Akash Deep Jyoti, Head, CRISIL Ratings
The real estate sector is expected to start stabilizing by the end of 2009, and show meaningful, positive demand growth by the first quarter of 2010. The recovery in demand will be gradual and will be the maximum for residential segment, followed by office and retail segments. The extent of recovery will be influenced by an improvement in overall economic growth. The improvement in property prices will follow the demand recovery of real estate. The investment interest is expected to improve in 2010 and there could be revival of public-private partnerships. The regulatory regime will also increase controls through an appointment of real estate regulator.

Biren Parekh, Associate Director, Ernst& Young
There will be extreme polarities which will come out in the property market – the expensive and the affordable. The Middle Income Group will be affected as a result. The developers were committed to their projects which were partially completed which came to a halt last year so that is being taken care of. New areas are coming up, especially in the outskirts. There is a huge trend in townships, large scale constructions – of 100 acres or so – which are self contained. Besides the outskirts there is a trend deep within the city which has a commercial implication to it. The urban population is hence moving out towards the outskirts of the city. Service apartments are mushrooming. On the commercial front the challenge is with the market demand and the supply. Developments for 1500 – 2500 sq. ft for Small and Medium Scale Industries are coming up. Commercial property owners are very strong financially so we will get people moving out from the city centers. Redevelopment is a long term cycle and not many see the light of the day and any impact, no matter how minor will be in 2-3 years. Maybe in 5-6 years time there might be a major change in redevelopment.

Gautam Mehra, Executive Director, PricewaterhouseCoopers
The real estate sector cannot be viewed in isolation. Given the bullish sentiments on the economy, the real estate sector is also expected to follow suit with the general perception being that ‘the worst is over’. The healthy rise in the stock markets in the recent past is again being accompanied by an increased attention on the premium residential segment. The ‘affordable housing’ buzz has the advantage of volumes and liquidity. Commercial segment continues to be driven by the demand-supply function.