Builders hope bright time in real estate business soon

Kochi, Aug 12 (UNI) Builders and property developers are hopeful that the present ''stagnation'' in the real estate market in the country would be over soon.

Admitting that there was a ''glut'' in the real estate market right now, with several high-priced properties lying vacant, the builders hope that the doldrums would be over soon.

''We are hopeful of tiding over the lull in another 10 to 12 months,'' Builders Association of India (BAI) Vice-President Cherian Varkey told UNI here.

He said the rising interest rates from mid-2006 had resulted in a slowdown in housing loans and the purchase of new properties.

''But, with new infrastructure projects being announced in tier II cities such as Kochi, we expect there will be a rise in demand for both residential and commercial space in one to two years' time,'' he said.

According to PRHUB Integrated Marketing Communications Ltd CEO Xavier Prabhu, cities such as Chandigarh, Indore, Kochi and Kolkata were emerging as new destinations for real estate development.

For instance, Kochi had witnessed a 35 per cent growth in the real estate market in the last year, he said.

However, according to officials in the LIC Housing Finance Ltd (LICHFL), property developers in cities such as Chennai had taken a hit as a large number of posh properties were lying unsold in the southern metropolis.

''Enthused by market research studies which estimated the housing demand in the country to touch 80 million units in the next 15 years and the real estate market to reach US$ 60 billion in 2010, compared to US billion in 2006, a large number of projects were started in Chennai. However, there are few takers for these apartments, which the customers find over-priced,'' the officials said.

On the other hand, cities such as Hyderabad, Bangalore and Delhi were better placed with a higher demand for real estate, they added.

In the long run, though, the real estate market would be bullish and even LICHFL was planning to float a realty fund to finance residential complexes, shopping malls and infoparks, they said.

According to Vijaya Bank CMD Prakash P Mallya, if inflation remained contained to less than 4.5 per cent, lending interests may come down by a quarter or half point in the next two to three months.

However, he said the bank had decided to moderate its credit to commercial real estate ventures to avoid speculative tendencies.

Stating that real estate developers were even now willing to take loans at interest rates of 14 to 15 per cent, Mr Mallya said ''we do not want to encourage speculative tendencies.'' UNI