The Hindu Business Line : `Real estate prices set for 20% correction'

The two recent e-auctions for prime property on Boat Club Road, Chennai, have further pushed the cost of land in this upmarket locality to over Rs 80 crore an acre.

Though experts predict that there would be 20 per cent "correction,' land prices all over India have been skyrocketing.

There is no evidence of a `bubble', says Mr Anuj Puri, Managing Director, Trammell Crow Meghraj, international property consultants. The residential sector is largely led by end-users and it is they who dictate the state of the market, he said.

He said there is a delayed correlation between the stock and property market as the latter is highly illiquid in nature. There are no indications that investor activity has overtaken genuine buyer demand.

In residential, the proportion is approximately 80 per cent end users and 20 per cent investors.

In the commercial sector, the proportion is almost 100 per cent end users who are taking property on lease. There are instances of overheating in markets such as Ludhiana in Punjab that are being led by investor rally, but these are localised, Mr Puri said.

He said property rates would largely remain stable for the next 4-6 months except in overheated markets such as Ludhiana.

Mr Puri said the demand for commercial space is inelastic and not subject to market vagaries. Purchase of such space is entirely need based. For most large companies and brands, real estate is a small component of their overall budgeting issues, he said. If space is needed, it is occupied due to business needs, no matter what the state of the stock or real estate market is.

Talking about the tier-2 cities, Mr Puri said there would be a marginal property price increase in the near future. This is because these cities are now the preferred destinations for Indian and international companies who seem to prefer them to the highly priced properties in major metros, where the available supply is far less than the present and escalating demand.

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