MALAYSIA: India’s heated property market is likely to cool in 2008, ICICI Bank chief executive KV Kamath said on Tuesday in a forecast that could give pause to domestic and foreign investors, who have poured billions of dollars into the country’s real estate. Mr Kamath said he sees “some correction in the next 12 months or so”, and cited a slowdown in the number of homes sold this year — and more land becoming available for sale — which would ease demand. Mr Kamath said there would not be a drastic fall, however.

“Correction could have been sharp in the past, but this time around correction will not be sharp. Maybe 20-25%,” he said. Kamath, 60, was in Malaysia to receive the Forbes Businessman of the Year award for resurrecting ICICI from near-bankruptcy and turning it into India’s largest private sector bank, as well as one of Asia’s top 10.

ICICI’s assets have grown 40% annually in the past three years to $93 billion, propelled by a boom in Indian consumer credit where it has a dominant one-third market share, including in home loans.

Source: The Economic Times
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  • I dont think that indian realty market will slow down in coming decade.
    CommentQuote
  • Discounted Property

    Just 5 days to save Rs 3,65,700! At Mantri Park, Goregaon, 1 BHK & 2 BHK apartments. Consider savings in stamp duty as additional sweetener. Rush! This offer is valid only up to April 13, 2008 or first 51 customers
    Rs 300 off per square foot only up to 20 April 2008. Lok Housing for Lok Raunak Phase II, Mumbai
    Pay 20 per cent now and 80 per cent on possession. Nahar Amritshakti at Chandivali, Mumbai
    Free modular kitchen, free parking, free interiors, stamp duty relief. New Delhi

    If all this was not enough, consider another recently concluded promotional offer by Bangalore-based Orange Properties that promised a Maruti SX4 free for every 1500 sq ft flat at Bannerghatta in India's silicon city. The apartments were priced at Rs 42 lakh. Considering the SX4 retails for Rs 6-8 lakh, the discount was pretty good.

    Earlier, the group had offered an Audi A4 worth Rs 30 lakh to buyers who booked a villa at its upcoming Magnolia Brooksville project in Bangalore. The villa was on offer at a down payment of Rs 10 lakh.
    The national capital region, where prices have cooled 5 to 10 per cent, is seeing developers quietly offer modular kitchens, free parking, free interiors and even stamp duty relief to attract buyers.

    Goodies and early bird discounts are not a new feature of India's real estate story, but the timing is significant. Real estate prices have climbed off their historic highs in the last six months on account of tighter liquidity and an overall decline in sentiment.

    According to recent reports, home sales have dropped 20 to 30 per cent over since last December in Mumbai, Delhi and Bangalore, the same cities in which residential prices had doubled or tripled since 2004.
    Real estate analysts believe higher discounts and more sweeteners are the first phase of a correction looming over the property sector.

    Said Ambar Maheshwari, director, investment advisory DTZ: "These measures are an admission by developers that their product is not moving. It is a first step before a more visible price correction".
    Successive interest rate rises have also meant that housing loan disbursals have fallen, with leading financiers like SBI and ICICI Bank witnessing a 10 to 14 per cent dip in home loan growth for calendar 2007 over the previous year.

    Ashutosh Limaye of property consultant Jones Lang LaSalle Meghraj (JLLM) said when the going is good, no one offers discounts. "Developers are giving these offers to boost sales. The goodies are aligned with the lifestyles of buyers," he adds.

    The harder hit among the rash of real estate developers in India (the industry is fragmented and highly local in nature) are the mid-sized companies which are, expectedly, pushing the discount strategy more than the big developers.

    Claiming there is no slowdown in demand, DLF and Unitech, India's largest real estate developers, said they are not resorting to any offers and discounts to beat the slump. "We have seen record sales in the just concluded quarter. We are not giving discounts and offers," a DLF spokesperson told Business Standard.

    But property consultants believe that even bigger developers will feel the pinch in the coming days. "Till now big developers could hold prices due to their financial strength. But they will have to resort to some kind of price cut," a prominent Mumbai-based property broker said.

    Raminder Grover, chief executive, JLLM, adds that while he has not seen too many advertisements of offers, he is aware of developers becoming more willing to offer discounts.

    "Some of them are also paying home loan instalments for a year or two," he said.
    CommentQuote
  • CommentQuote
  • Still not good enough! Wait for REAL BIG DROP!

    Arin,

    What you see now is what was happening on 2006 in US - to make a comparison. Still early days in our decline.

    With last weeks crash in Stocks worldwide and an general understanding that the world is VERY CLOSE to a global financial meltdown, it is very clear that the emergency measures taken to fight that one will severely tear down the credit markets, tightening an already tight (36% interest!) credit market in India.

    These discounts are just games Builders and RE companies are playing, thinking this will end soon and they can get away with it.

    This will take till 2010 - 2012 to bottom out; end is yet many years away :D.

    Wait for the 50% - 80% drop in listed prices. Then you will have good long-term bargains. You might even expect these discounts soon as RE companies are close to going bust with their low capitalisation, high leverage and thin margins as well as holding large inventory at ridiculously high costs.

    Truly, a recipe for quick disaster. With recession certain and possibly a global depression, job losses in India (especially IT/BPO) will mount. Salaries too will crash. Even existing loans will become difficult to sustain. And many, many loans will go underwater as loan amount will exceed home equity - JUST AS IN USA!

    WAIT with CASH in hand. CASH is KING in recessions.

    cheers


    Originally Posted by arin_12
    Just 5 days to save Rs 3,65,700! At Mantri Park, Goregaon, 1 BHK & 2 BHK apartments. Consider savings in stamp duty as additional sweetener. Rush! This offer is valid only up to April 13, 2008 or first 51 customers
    Rs 300 off per square foot only up to 20 April 2008. Lok Housing for Lok Raunak Phase II, Mumbai
    Pay 20 per cent now and 80 per cent on possession. Nahar Amritshakti at Chandivali, Mumbai
    Free modular kitchen, free parking, free interiors, stamp duty relief. New Delhi

    If all this was not enough, consider another recently concluded promotional offer by Bangalore-based Orange Properties that promised a Maruti SX4 free for every 1500 sq ft flat at Bannerghatta in India's silicon city. The apartments were priced at Rs 42 lakh. Considering the SX4 retails for Rs 6-8 lakh, the discount was pretty good.

    Earlier, the group had offered an Audi A4 worth Rs 30 lakh to buyers who booked a villa at its upcoming Magnolia Brooksville project in Bangalore. The villa was on offer at a down payment of Rs 10 lakh.
    The national capital region, where prices have cooled 5 to 10 per cent, is seeing developers quietly offer modular kitchens, free parking, free interiors and even stamp duty relief to attract buyers.

    Goodies and early bird discounts are not a new feature of India's real estate story, but the timing is significant. Real estate prices have climbed off their historic highs in the last six months on account of tighter liquidity and an overall decline in sentiment.

    According to recent reports, home sales have dropped 20 to 30 per cent over since last December in Mumbai, Delhi and Bangalore, the same cities in which residential prices had doubled or tripled since 2004.
    Real estate analysts believe higher discounts and more sweeteners are the first phase of a correction looming over the property sector.

    Said Ambar Maheshwari, director, investment advisory DTZ: "These measures are an admission by developers that their product is not moving. It is a first step before a more visible price correction".
    Successive interest rate rises have also meant that housing loan disbursals have fallen, with leading financiers like SBI and ICICI Bank witnessing a 10 to 14 per cent dip in home loan growth for calendar 2007 over the previous year.

    Ashutosh Limaye of property consultant Jones Lang LaSalle Meghraj (JLLM) said when the going is good, no one offers discounts. "Developers are giving these offers to boost sales. The goodies are aligned with the lifestyles of buyers," he adds.

    The harder hit among the rash of real estate developers in India (the industry is fragmented and highly local in nature) are the mid-sized companies which are, expectedly, pushing the discount strategy more than the big developers.

    Claiming there is no slowdown in demand, DLF and Unitech, India's largest real estate developers, said they are not resorting to any offers and discounts to beat the slump. "We have seen record sales in the just concluded quarter. We are not giving discounts and offers," a DLF spokesperson told Business Standard.

    But property consultants believe that even bigger developers will feel the pinch in the coming days. "Till now big developers could hold prices due to their financial strength. But they will have to resort to some kind of price cut," a prominent Mumbai-based property broker said.

    Raminder Grover, chief executive, JLLM, adds that while he has not seen too many advertisements of offers, he is aware of developers becoming more willing to offer discounts.

    "Some of them are also paying home loan instalments for a year or two," he said.
    CommentQuote