[T.S.R:17103] Real Estate-Developers Will Confront OverSupply, Low Transaction Markets In 2011-12 (CBRE)

CB Richard Ellis

DLF, Unitech Will Have To Grapple With High Inventories, Poor Volumes As Speculators Take-Over NCR Suburbs

 

Amongst the key challenges being faced by the residential segment is the issue of rising prices in major urban areas, as a direct consequence of speculative interest having entered the markets of Delhi and Mumbai. This has impacted sales activity as end users have been moving away from the market. 

 

India as a residential destination will witness a major challenge in the form of rising prices in major urban locations. This is a direct consequence of speculative interest having entered major markets. This will impact sales activity as end users might be deferred away from the market. 

 

The bribe for loan scam is expected to tighten project funding from banks and financing institutions. Although developers will try to opt for alternative arrangements like PE funds or IPOs, this is still expected to put liquidity pressures on certain developers.

 

This might result into developers promoting reduced price points to encourage sales. Developers will continue to shift focus from affordable and mid segment product type to premium/luxury/high income housing in a short to medium term. However, demand for premium is expected to remain limited and this product shift might not generate adequate response from buyers especially in non-prime locations like peripheral markets.

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