Indian real estate sector outlook for 2012: Fitch Ratings
Fitch Ratings’ outlook for 2012 for the Indian real estate sector is negative due to weak overall demand and higher construction costs, which are likely to continue to squeeze margins.
Fitch Ratings’ outlook for 2012 for the Indian real estate sector is negative due to weak overall demand and higher construction costs, which are likely to continue to squeeze margins.
Macro level forecast suggests Asia in general, and China and India in particular, will continue to attract foreign direct investment (FDI) despite the slowdown as Europe and the US continue to grapple with economic problems of their own.
In India, investor interest is also seeing a slowdown on account of the lower absorption of new developments and the disparity between investment returns and capital values.
With benefits under STPI scheme gone and deadline to fully avail SEZ benefits set for March 2014, demand for SEZ space is expected to witness some momentum in 2012.
Global financial uncertainty, shrinking demand, liquidity crunch, repo hike and demand-supply mismatch…all is not well with the commercial real estate in India.
Economic growth and real estate performance are two significantly intertwined characteristics. It is widely accepted fact that demand for real estate space is drawn and influenced from economic environment.
One of the biggest problems afflicting the sector is its high level of debt. The debt load of 11 listed real estate companies stands at Rs.38,500 crore.
A Knight Frank report suggests revenues of real estate companies have dropped by 19 per cent and profits have declined by 70 per cent, over the past four financial years, since 2007-08.
Market forces of demand and supply are the most potent determinants of price and the developments in the real estate industry during year 2011 is the latest example.
What is in store for the real estate sector in 2012 remains the biggest question. Knight Frank believes in terms of the residential segment, the deadlock between the buyers and developers should break in favour of buyers.