India is the ninth largest construction market in the world according to a Global Construction 2020 report by Oxford Economics. Growing at an estimated cumulative annual growth rate of 8.9%, it is expected to become the third largest market by 2020 and is globally acknowledged as an extremely lucrative business opportunity.
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.
Indian commercial property market has lost momentum in Q3 with the capital values turning negative for the first time since 2009.
With the US and European debt crisis affecting sentiments across the world, the Indian real estate sector is likely to see a gloomy phase in the next 12 months.
Standard & Poor’s Rating Services on Monday, July 4, said the surge in real estate prices in some pockets in India could emerge as a credit risk for banks.
Alarmed by inflated valuations of real estate properties for the purpose of loans, the Reserve Bank of India has asked all banks to submit an action-taken report on the issue.
The National Housing Bank (NHB) and Indian Banks’ Association (IBA) are jointly preparing the norms, standards and procedures for real estate valuation.
Indian real estate is expected to face “large-scale distress” amid rising borrowing costs and shrinking access to credit that may force developers into fire sales for assets, according to Knight Frank.
A growing number of investors from India are showing interest in Dubai as they look to capitalize on 60 per cent savings per square foot in the Dubai property market, a Dubai-based real estate company has said.
While the banks and financial institutions are overtly blaming the real estate companies for defaulting on the loan repayment, it is learnt that they are also showing largesse to the realtors by rescheduling their loan repayment.