It promises to be a happier new year for home buyers. After a sharp surge in real estate prices during 2010, most experts predict some kind of correction in the year ahead, giving relief to actual buyers.
For the realty sector struggling with a mountain of debt and stuck investments in projects, the surge in buyer interest in 2010 unclogged the pipes and got cash flowing again. It was indeed a good year for the sector as it saw new many projects being launched; several initial public offerings (IPOs) and major land deals taking place.
But the boom rapidly developed into a bubble, with home prices climbing to unrealistic levels, especially in the metros like Delhi and Mumbai. Residential property prices, which saw a correction post slowdown, spiked in the last six months. In some of the pockets, the appreciation was as high as 60-80 per cent.
Looking forward to 2011, industry experts feel that the home buyers may see some respite as the year will see softening of home prices, expected to roll in from March onwards.
Home buyers can hope for a 15- 25 per cent correction home prices, analysts say. "You are going to see some kind of a correction of between 15-20 per cent, come March 2011, especially in the luxury segment.
In affordable segment, we don't see any correction but there will be no rampant appreciation either," Pranav Vakil, chairman, Knight Frank, a leading property consultancy said.
"The last two months have seen interest in Mumbai and Gurgaon realty markets easing sharply. Next year one can expect 10 to 15 per cent fall in realty rates. Most of this correction is likely to take place between April and September," Kaustuv Roy, executive director (ED) of realty services firm Cushman and Wakefield said.
According to Vakil, falling home sales and the pressure on developers to repay their loans will lead to the correction process.
Many developers including DLF and Unitech took loans from banks which they failed to pay during the slowdown and restructured. Now March 2011 onward they will have to repay the loans, which Vakil feels will result into a tight monetary condition for them.
" The developers are expecting this time around again these loans will be permitted to be rolled over the way they were done in the last two years. However I don't feel the RBI is in a mood to allow that to happen," Vakil said.
However, the developers feel that prices are not going to soften until the demand- supply gap eases.
Rajeev Talwar, group executive director, DLF, said, " The prices are at an all time high. However, I do not see steep correction because of huge gap in the demand and supply. There should be more supply." " The state and central government must come together to ensure that there is infrastructure support and enough dwelling units in Delhi and the nearby areas. That is the only way to control price," Talwar told M AIL T ODAY . " Policy reforms are required. I do not see any reason why Noida or Delhi cannot have a high rise building, just like Mumbai. If cities are growing, it ( infrastructure) needs to be planned in a better way as well.
The government must relax the Floor Space Index ( FSI) norms so that there could be more vertical growth. Only then can housing problems be sorted out," Talwar said.
For office space, both developers and industry experts feel that the demand that saw some improvement will continue to grow for next year.
"The demand is improving for the office space as most of the companies are looking towards expansion. It will keep growing in the year 2011. However, even as the demand grows we do not see any major upward correction in the prices," Anshuman Magazine, chairman and managing director ( CMD), CB Richard Ellis ( South Asia) said.
Courtesy: Mail Today 
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