Developers have begun new projects after a year-long hiatus and are also swapping older premium project proposals for cheaper ones to restart sales as they try to beat a severe cash crunch.
High interest rates and the general economic slowdown have kept buyers away and funding from investors has dried up. But now a spate of interest rate cuts and an injection of optimism are encouraging developers to focus on new projects aimed at middle income buyers rather than re-marketing existing ones and this is the key to the future prosperity of the real estate market, analysts claims.
But they are not expecting a sudden turnaround. 'While the market has turned up, I don't expect it to be back to 2007 or 2008 levels for another six or eight months,' said Rajesh Goenka, Chairman of Axiom Estates real estate agency.
The countries three big developers – Unitech, Parsvnath and DLF – all say they are now concentrating on affordable property rather than the luxury end of the market.
In the first quarter of 2009 half of the homes sold were in 114 new projects of the 2,000 available for sale, according to estimates by realty rating and research agency, Liases Foras.
Despite a cautious revival in demand for homes, the sales taking place now are not spread evenly despite prices falling by 40% from their peak for under-construction houses mainly in southern and northern India, analysts added.
But demand in the real estate market is expected to turn positive in 2010 due to improvement in affordability, steady economic growth and greater liquidity, according to a report from Crisil research.
'Accelerated growth in the Indian economy, the recovery of the global economy, improved liquidity and an expected fall in interest rates are key factors that will signal demand revival in the residential segment. This segment is likely to see a much faster revival due to a strong underlying demand for housing and supply coming at attractive price points,' said Sudhir Nair.
