Real Estate Investments are likely to fall in the year of 2007 as compared to the previous 2 years. This is predicted because of the 12.36% tax on commercial rentals. According to CNBC Report:

Private equity players investing in the real estate market may not be a happy lot, with abundant commercial and residential supply likely to hit the market in 2007, as returns on real estate investments are likely to fall, reports CNBC-TV18.

The lucrative real estate market may not remain as profitable for private equity investors or developers as it has been in the past two years. The higher dividend distribution tax and the 12.36% service tax on commercial rents imposed by the Budget will eat into returns of investors. This comes on top of surging land prices, which have sharply reduced the margins of developers.

"There is too much liquidity foreign funds chasing the limited land supply so automatically the prices of land are very high and as a result of high land prices returns or margins of developers, investors, private equity players have fallen drastically" says Subodh Runwal, Managing Director, Runwal Group.

On the other hand a slew of developed projects are likely to flood the market this year. Realty consultants Cushman and Wakefield projects that business hubs like Bangalore will add 16 million sq feet of developed office space, Chennai will another 12 million sq feet, Delhi and the NCR region will see 10.5 million square feet of new office space and the commercial capital Mumbai will see 9.1 million square feet entering the market. Though nearly 40% of this office space is estimated to have been already pre leased to tenant, developers expect prices to fall with so much supply entering the market.

Rupee returns is expected to be 15 to 20%, which is lot more than what is expected from markets like Australia or Europe. So people will get returns of 15 to 20% not euphoric returns of 30% about which we have talked earlier,” adds Pranay Vakil, Chairman, Knight Frank

The other factors that are likely to impact investor returns are raising construction costs for developers and also higher interest rates for genuine homebuyers, which may dampen buying sentiment. These will also contribute to the correction in real estate prices

Experts say that though private equity investors are unlikely to flee the Indian real estate market they will certainly re-examine their investments in India. Nearly USD 17 billion is waiting to enter the market, but all of it may not come in.

So Can anybody tell me at this point, investments in the Real Estate will be Beneficial or Not? Will they payback in the same way this year too as the previous two years?
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  • Right time now investments in real estate near International Airport Hyderabad....A.P

    We are developing mega township with DTCP approved layout, like upcoming international airport, Textile Park, Fab City, Golf Course, etc plus educational institutions like N G Ranga Agricultural University and engineering colleges, gives it an added lInvestment Hot Spots near New International Airport, Hyderabad
    Exclusive Ventures, which specializes in research and analysis of emerging real estate opportunities, announced release of three new projects, close to the New International Airport at Hyderabad.

    The projects were brought for international booking prior to the release of Semi- Conductor Policy by the Union Govt. which is expected to drive US$10 Billion investment into the vicinity of the New Airport at Shamshabad. In a recent analysis, Mr. Pramod Kiron, CEO of Exclusive Ventures, averred. “For the layman, otherwise busy with his own work, its impossible to visualize the future, along the stretch of land from Airport to Thummalur. But if you sit down and look at the upcoming investments and the resultant employment generation possibilities, its easy to figure out where we would be, after 3 to 4 years”

    Apart from the New International Airport and its ancillary facilities, the locality would brim with high profile projects each pulling in, thousands of employees. The major projects are Fabcity, Hardware Park, SEZs by Stargaze, JT Holding, Indu Tech, Infosys, Wipro, TCS, Brahmani Info. Fabcity with US$ 3.6 Billion investment by Semindia / NTSI would take the lead in powerful growth of the location, into a Tech City. The recent Semiconductor Policy may trigger installation of Foundries in India by leaders in this area, like Intel, STM, TI, TSMC. The 1200 Acres world class industrial park for setting up Fab Units near Hyderabad Airport could attract many of these companies, due to the excellent infrastructure, dry whether and offer of low cost power and water, by the State Govt.

    “By 2015, A million jobseekers are expected to move into this area, creating a mega city of unimaginable proportions. The empty roads sides would spring into vibrant commercial activity. The transformation would be rapid and would put in shade, the recent emergence of Hitec City at Hyderabad, in size and magnificence.”

    “Exclusive Ventures is continually analyzing information on upcoming commercial and IT projects and Advisory Notes are prepared to help in low cost, but absolutely safe investments. in this emerging location. The identification of HUDA / HADA Approved layout apart from the best DTCP layouts, in future hot spots should help our members from across the world to make strategic early investments.”
  • which investment will be beneficial right now ?