Monday, May 4, 2009

Real Estate sector is showing some recovery in first quarter of 2009


After an acute slowdown in the third and fourth quarter of 2008, the real estate sector is now showing improvement in the first quarter of 2009 ending March 31. A report prepared by Prop Equity Research suggested that in majority of cities there has been a surge in absorption. A recent study by Prop Equity across Bangalore, Mumbai ,Hyderabad, Chennai, and Gurgaon in NCR says that absorption was high in the residential new launches in the first quarter of 2009 in Gurgaon,Chennai and Mumbai. Bangalore and Hyderabad witnessed fewer new launches during this period, experienced a low absorption.

Due to rise in the interest rates in the January-March 2008, by almost 2 percentage points, to 12%, the real estate sector has experienced one of the worst kinds of slowdown. At the same time, residential apartments in most of the cities became unaffordable for most buyers due to the prevailing prices of these residential apartments. Global financial markets got affected due to the failure of banks and brokering houses in the US and Europe which further worsened the situation. This also affected the real estate market of India very badly.According to the report , October-December 2008 saw the absorption of only 1,113 units in Mumbai, the first quarter of 2009 saw the absorption of about14,478 residential apartment units. As against this, 3,096 units were launched, in October-December 2008, 3,096 units were launched, the report said. This means, 40% of the launched apartments got sold in the first quarter of 2009, which is said to be a good turnover. In the same way, in Gurgaon, during January-March 2009, 8 05 units were sold out while 4,480 units were launched. As against this, only 587 units were sold out of 3,708 units launched during October-December 2008. Therefore, the absorbed and launched figure showed sign of recovery in first quarter of year 2009.

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Real Estate Developers Facing Crisis Due To Market Melt Down


Real Estate Developers are in trouble due to market melt down. Realty consultants say with very few buyers in the market, majority of projects have not taken off in various markets. Major real estate developers like DLF, Unitech, Parsvnath Developers,Omaxe and Emaar MGF are moving out from their core areas to develop projects in different cities. Nearly, 65-70% of these projects have not taken off. DLF, for example, have pulled out of many commercial projects in Gurgaon and Manesar. In the same way, Unitech’s projects in Kolkata and Mohali have also not taken palce as per the plan. Parsvnath Developers has also hold back its plans to construct several projects that were in the queue.
Executive director at consultancy Cushman & Wakefield says that the performance of any player depends on the cost of land acquisition. All those developers who bought land at higher price in the last two to three years are facing major challenge in these times. They bought assuming that the market is going well and will continue to go up. But today they are facing alot as they are not able to construct on same value as when they had bought it.