How is the US credit rating downgrade going to affect the Indian real estate industry? Read on. . .
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| Long term impact on Indian real estate |
With Standard & Poor's lowering of the US ratings from AAA to AA+, analysts feel it’s only the sentiment that would become negative in the short term. (Sentiments? Er, property buying is mostly about sentiments and that means sales would be hit, right?) In the long run, however, the commercial property space might face the heat.
Anshuman Magazine, managing director (South Asia), C B Richard Ellis, a leading real estate consultant, said unlike mature economies, Indian real estate sector does not attract much foreign investment, hence there is no reason to worry in the short run.
ECB (external commercial borrowing) or bonds are not allowed in the sector, so there won’t be much impact,” said Manoj Goyal, senior vice-president, Raheja Developers Ltd.
However, Magazine cautioned if there was a slowdown, it may have a long-term impact on the office market. The sentiment of the Indian real estate sector has already been negative due to the high interest rates and steep input costs. We at Indian real estate for Dummies have been writing about that for a while now. Try clicking on our cloud tabs 'Developer' and 'Home Loan' to read those articles.
Demand from IT/ITeS firms constitutes over 60 per cent of office off-take in the country and any uncertainty in the US is expected to curb their demand for offices. "Since IT firms are likely to suffer due to the US crisis, they may defer buying or renting new spaces. You can also expect this from financial services companies, international fund managers and so on,” said a senior executive with HDFC Property Fund.
Anuj Puri, chairman & country head, Jones Lang LaSalle, India, said since the US would reduce its spending on IT, it would impact the outsourcing business, ultimately affecting the Indian real estate sector at various levels. “The downgrade would see a reduction in foreign institutional investment, including those targeted at real estate,” he said.
Some developers fear the re-run of the 2008 financial crisis. Then, office rents fell by 40 per cent.
Mumbai residential market, which witnessed one of the lowest dip in registrations, could see further fall, said property experts. June saw 30 per cent dip in the number of property registered in Mumbai, one of the lowest in the last six months. Though registrations do not really give you a real time figure as for new properties, registration is a process that happens only 3 to 5 years after the actual sale has been closed! The IT slowdown, we reckon as stated by Anuj does pose a serious and multi level threat to the Indian real estate industry. We can, only wait and watch. More on this as we come across some.
ECB (external commercial borrowing) or bonds are not allowed in the sector, so there won’t be much impact,” said Manoj Goyal, senior vice-president, Raheja Developers Ltd.
However, Magazine cautioned if there was a slowdown, it may have a long-term impact on the office market. The sentiment of the Indian real estate sector has already been negative due to the high interest rates and steep input costs. We at Indian real estate for Dummies have been writing about that for a while now. Try clicking on our cloud tabs 'Developer' and 'Home Loan' to read those articles.
Demand from IT/ITeS firms constitutes over 60 per cent of office off-take in the country and any uncertainty in the US is expected to curb their demand for offices. "Since IT firms are likely to suffer due to the US crisis, they may defer buying or renting new spaces. You can also expect this from financial services companies, international fund managers and so on,” said a senior executive with HDFC Property Fund.
Anuj Puri, chairman & country head, Jones Lang LaSalle, India, said since the US would reduce its spending on IT, it would impact the outsourcing business, ultimately affecting the Indian real estate sector at various levels. “The downgrade would see a reduction in foreign institutional investment, including those targeted at real estate,” he said.
Some developers fear the re-run of the 2008 financial crisis. Then, office rents fell by 40 per cent.
Mumbai residential market, which witnessed one of the lowest dip in registrations, could see further fall, said property experts. June saw 30 per cent dip in the number of property registered in Mumbai, one of the lowest in the last six months. Though registrations do not really give you a real time figure as for new properties, registration is a process that happens only 3 to 5 years after the actual sale has been closed! The IT slowdown, we reckon as stated by Anuj does pose a serious and multi level threat to the Indian real estate industry. We can, only wait and watch. More on this as we come across some.
Excerpts from Business Standard
There are a lot of misconceptions that are floating around when it comes to being able to get a mortgage after a short sale or foreclosure. I figured it would be great to have a nice reference for consumers to have a better understanding of some of the credit issues with short sales.
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