Business Daily from THE HINDU group of publications
Tuesday, Jul 03, 2007
ePaper
Business Daily from THE HINDU group of publications Tuesday, Jul 03, 2007 ePaper |
|
|
|
|
|
|
|
Markets
-
Interview Industry & Economy - Real Estate & Construction
Nilanjan Dey Kolkata, July 2 Bluestone Quantum Management Pvt Ltd, a joint venture between real estate investment and development group Bluestone Asia and Quantum Business Consulting Ltd, expects to start making more strategic investments in key Indian cities. Here, Mr Manish Agarwal, Director, Bluestone Quantum, talks about emerging trends, including softening of prices. He also dwells on risks that real estate investors may have to face. Excerpts. Real estate prices have softened in recent times. Is this trend likely to continue? Yes, the softening trend is expected to continue for some more time, especially in the sub-markets where end-user demand appears to be reducing. At the heart of the trend is the demand-supply mismatch that has come in the wake of the realisation that real estate is truly an alternative investment class. The general economic scenario is good and, indeed, it is the liquidity in the economy that has driven prices to new peaks far too quickly. With the investor becoming sceptical about price appreciation in the short term, increases in housing loan rates and faster rates of supply of constructed units, the market will react till the macro factors are under control. The property market in India is good only in parts, not all pockets are worth investing in right now. Do you agree? Right, besides the main markets, the scenario looks attractive only in select Tier II centres and certain micro markets. Here, the local demographic profile and the kind of infrastructure facilities available will be the key determinants for rising property prices. In some areas, considerable hype has been created, leading to artificial demand and spiralling prices. Over time, such hype will die down. Investment flows (including from abroad) are concentrated mainly in Tier I cities. Many other centres are being ignored. How do you view the trend? The big and organised names in the industry, associated as they are with large projects, are mostly in Tier I cities. These will always see demand getting created for certain price brackets. It is easy to conclude that Tier I cities will attract more FDI. Mind you, this is not to suggest that the Tier II range is not witnessing considerable interest. Yet, a lack of infrastructure and the fear of excessive demand are among its main concerns. It is, really speaking, a trade-off for investors. In such a situation, they need to have a good risk management strategy in place. For some overseas participants, there can be a relative lack of local intelligence. What are the possible risks to real estate investments at this stage? What are the factors that may halt the upbeat trend, at least temporarily? A probable policy reversal in FDI for real estate will be a damper. Also, government intervention and control in the sector may change the general perception among property buyers and investors, at least in the short term. The buyer will have to wait for prices to reduce. Besides, a slowdown in the supply of real estate will change the dynamics of the game in the near future.
More Stories on : Interview | Real Estate & Construction
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | The Hindu ePaper | Business Line | Business Line ePaper | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2007, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|