Manoj Misra

Friends:

Across the globe, there are very few examples of busting of a real estate bubble. I mean the market crash. Hong Kong is one country where from 1995 to 1997, there was a significant increase in the market prices followed by a declining from 1997 until 2002. The market crash was catastrophic and impacted several people (rather economy) badly.

Key questions:

1. What are the characteristics of a property market "bubble"?
2. How is Indian market shaping up (do we really have the correct information and hence correct picture and if now, how do we get it)?

Views of how do we get the correct idea on what's the Indian market scenario, and in general your individual perception of market, will be highly valuable to get!

John

India's real estate sector is estimated to grow to $90 billion by 2015 from $12 billion in 2005. According to estimates by the Asian Development Bank. India will need as many as 10 million new housing units a year by 2030. Such huge demand coupled with 100 per cent FDI in construction projects has catapulted the real estate sector to such heights that many analysts fear a property bubble is forming in India and a price correction of 10 per cent to 40 per cent is imminent.

However, one of the leading real estate developers in the world, Tishman Speyer, thinks differently. In every economy especially in growing economies, there are cycles in real estate. "This sector generally, not always but generally, follows the economy of the place. Now India is predicting a nine per cent increment in its business sector. I think we have to draw the conclusion that real estate sector should be growing at a higher pace than that,"said Jerry I. Speyer, president, Tishman Speyer.

According to Kok Huat Goh, CEO, TSI Ventures,"Real estate goes in waves of slumps and booms and no two situations are ever the same,". So if prices had slumped in 1995-2001 in India, it does not mean that such a situation will arrive again. If one looks at the underlying fundamentals, which right now is extremely strong in India, any price correction would be restricted to micro markets.

Source: Asian Age
Date: 10/7/07