The recent price trend and the government intervention would clean up the market but initially would have a corrective effect on the building and real estate sector. In the long run, the sector would be healthier and the expected inflow of high income professionals to Kochi would ensure demand for good residential apartments. Quality and customer service will be the crucial factors, he reiterated. Many
Property Builders in Tripunithura believe that flats are likely to appreciate further in view of the good demand for land or flat, especially from buyers in the Persian Gulf region, UK and USA. They see land and apartments as a good investment that will deliver returns better than any other investment, and with lower risk.
Real estate investors in India were also worried that Lehman might resort to a fire sale of its assets. While India has a three-year lock-in period for foreign direct investment (FDI) in real estate, it is unclear whether this applies when a company declares bankruptcy. The government decided to hold a meeting to decide the norms in such cases. The other issue holds small stakes bought from the market or in bulk deals in real estate and infrastructure companies. Stock prices of major realty players have all tumbled in the last one year. They are waiting to discover new value paradigms before they make any fresh investments in the realty space. Developers are likely to have a re-look at their business models and their consumption patterns to bring it in line with the current market expectations. The builders have boom and bust cycles in India but because of our huge population, the demand keeps growing and that sustains the industry. You can build for the next 100 years and there will still be demand for housing in this country. The sector would overcome this temporary setback as Kerala and especially Kochi needed a large number of new residential buildings. Those who score on these factors can benefit in the long run as Kochi is becoming a major hub for trans-shipment and IT enabled services.
