Indian Residential Real Estate: Forecast for the year 2012

Indian Residential Real Estate:  

Forecast for the year 2012
- Ashutosh Limaye, Head ­ research & real estate intelligence service, Jones Lang LaSalle India

Mr. Ashutosh Limaye, Head ­ Research , JLL India

In India, house and flats sales remained slow in most of the cities in 2011. Residential project launches also showed a marked slowdown by 3rd quarter of  2011.

The demand for office and retail space leasing remained healthy in most of the Indian cities. Because of the prevailing uncertainties in the global market & the likelihood of further interest rate hikes by the RBI (Reserve Bank of India) in the early part of 2012, sentiments on the residential market will remain cautious over the short term.

Absorption Rate..!
The 'absorption rate' ­(Its meaning the ratio of sales over inventory in the real estate market)­ is likely to be low, and the incidence of new launches will decline.

Rise in capital values will be marginal because of low sales. Project specific price increases can be expected across all sub-markets ­this pertains specially to projects that are being delivered or are nearing completion.

Affordable Housing Segment...!

The mid-end and affordable housing segments will record healthy appreciation in capital values in the short term from a low base.
Jones Lang LaSalle India expect these trends to continue during fourth quarter  of 2011and first half of 2012.

Overall macro-economic conditions will keep investor sentiments at cautious levels, both in terms of FDI (Foreign Direct Investment) & FII (Foreign Institutional Investors). FDI inflows, which are at present muted because of the slowdown in the India's GDP (Gross Domestic Production) growth rate, will probably remain sluggish over the short term.

However, as the Indian economy continues to show its resilience in 2012, FII's will gain in confidence and India will become attractive among competing investment destinations.

Residential Developers..!

Meanwhile, residential developers will continue to tackle the current liquidity crunch due to slow sales & high interest rates.

Jones Lang LaSalle India will see a slowdown in construction activity for the time being. However, as demand improves, improving sales will benefit developers who will focus on execution of their ongoing project portfolios.

About the Author
Mr. Ashutosh Limaye is the head of Research and Real Estate Intelligence Service, for 
Jones Lang LaSalle in India, based in Mumbai. He has an experience in real estate consulting for over 8 years and was heading JLL’s Strategic Consulting business for West India until June 2011.
He has worked on several PPP projects in India, including modernization of Mumbai and Bangalore Airports, World Bank funded Mumbai Urban Transportation Project, and Seawoods suburban train station, Mumbai. He is an architect and urban planner with a total work experience of about 15 years in real estate, Urban Governance,Urban Planning & Architecture.

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