End of the tunnel?

It’s going to be a rough ride for some more months for the country’s real estate developers before they see light at the end of the tunnel. Phoenix Hope, a report by real estate consultancy DTZ International Property Advisors, talks about the bottoming out of the real estate market in 2009-10, and says fortunes could revive thereafter.

“Real estate developers need to cut prices by an aggressive 30 per cent. Drip feeds don’t work in these times,” observes Anshul Jain, CEO (India), DTZ. According to the report, both rental and capital values are on the decline and it will probably be the third quarter of 2009-10 before prices stabilise.

Even in the commercial real estate segment, of the 212 million square feet space originally scheduled to hit the market by 2010, DTZ estimates that only 88 million square feet will get completed by the projected timeline. “Even with drop in supply—by 58 per cent—demand is going to drop this year,” he adds. The report focusses on realty markets in the five metros and Pune, and says that the inflexion point, when a substantial price correction in rentals starts, will occur in the latter half of the current year.

“Real estate prices rose by 200-300 per cent in the last three years, which means that developers are well cushioned to take a few