Credit crisis to hit commercial realty projects

September 28, 2008	(Be the first to rate this story!)  Loading ...
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The US financial crisis is expected to have a cascading effect on the Indian realty sector, especially on the commercial sector that has already slowed down considerably over the past one year. According to industry sources, there could be a softening in the values of commercial property to the tune of 10% to 15% post-US meltdown. As a result, vacancy levels in commercial space across the country are expected to touch 10% by the end of this year from 6% last June.

Marketmen see prices cooling and projects being held up because of the drying up of cheap funds. In fact, now raising funds from US and Western European investors, who accounted for a bulk of FDI in the sector, will be difficult. Says Anuj Puri chairman, Jones Lang LaSalle Meghraj: “Flow of funds from the US will definitely come down, at least in the short term. Funds to both private and public equities of developers are likely to fall. They will have to look at new avenues like middle-east and Korea. Although this development (the declaration of bankruptcy) will have no direct impact on the real estate sector, there may be indirect ramifications. Foreign capital for private equity investments in Indian real estate may be affected, and the stock of listed companies invested in these portfolios could take a beating due to negative sentiments.”

News Published Under:   Real Estate India |

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