Recently an acquaintance – a fund manager by profession – relocated to India to set-up a domestic PE fund here. He had invested in a Mumbai residential property strategically located close to the primary business district and an international school for his kid.
Come budget and the real estate sector, like any other industry, comes out with its own wish list. Unfortunately, while other organised industry get a patient hearing through their industry bodies, the Finance minister seem to be hardly entertaining the sector representatives till recently.
In a bid to boost housing sector credit, the Indian government is contemplating to enhance the income-tax exemption for up to Rs 3 lakh paid as interest on housing loans in a year, from the existing limit of Rs 1.5 lakh.
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.
Mumbai’s residential home sales dropped to a three-year low in the quarter ended December as record home prices and higher interest rates crimped demand, according to Liases Foras Real Estate Rating & Research Pvt.
Analysts are worried and do not see a rosy picture ahead in 2012. According to them real estate companies planning IPOs in 2012 may experience a lack of enthusiasm on the part of investors.
In 2011 six big ticket real estate IPOs was expected to raise over $2.9 billion or Rs.13,000 crore. Emaar MGF, which could not raise money in the capital market in consecutive attempts even when market conditions were conducive.
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.
With the real estate industry facing a shortage of skilled manpower, the Confederation of Real Estate Developers’ Association of India (CREDAI) has launched a skill development programme in Pune.
With the market set to bottom by out by the second quarter of 2012, we will see the beginning of a recovery in the city’s residential real estate fortunes by the second half of the year.