Asia Sentinel, 21 Nov 2008, Neeta Lal
A once-vibrant property market goes into free fall
India's prospective homebuyers recently woke up to a tsunami of offers from real estate developers during the Dussehra and Diwali holidays, including astonishing perks such as Mercedes-Benz, BMW and Toyota cars, gold nuggets and foreign vacations. The Mumbai-based Cosmos Group offered a free one-bedroom home with every bungalow and premium flat at four upcoming projects.
The unprecedented offers have astonished prospective buyers. But the desperation moves are little more than a disguise for the current crisis engulfing India’s real estate sector. With profits eroding, a liquidity crunch and dwindling demand, property developers are facing their worst downturn since the turn of the century.
Seven major Indian cities face dying demand after the quarter that ended in September, according to a recent report on the office market by the global real estate consultant CB Richard Ellis. Leasing also has slowed significantly, the report says. Sales in all three major sectors – residential, office and retail – have declined. According to Richard Ellis, the Indian real estate investment market continues “to remain subdued amid economic worries.” High interest rates and inflation, the agency says, have negatively impacted investor demand.
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