Fitch's Indian real estate outlook negative in H2 '12
06 Aug 2012
In its 2012 Mid-Year Outlook series, ratings agency Fitch says its outlook for the Indian real estate sector continues to be 'negative' for H212, due to persistent sluggish demand, high construction costs and liquidity pressures.
"Given Reserve Bank of India's caution on interest rate cuts, high equated monthly instalments (EMIs) will continue to be a deterrent for potential home buyers. Fitch's 2012 Mid-Year Outlook: Indian Real Estate Sector, warns.
This, together with high property prices and elevated inflation will keep demand sluggish, it added.
"However, y-o-y growth of home loans by banks - which had been slowing for the 12 months to April 2012 - picked up markedly in May and June 2012, and if continued may help spur the sector," it said.
The slowdown in the economy and subdued job growth in the IT sector, which was at its lowest quarterly level in Q212, will hold back demand for commercial and retail properties.
Real estate companies will continue to face margin compression from high construction costs for both building materials and labour.
