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Realty: Key drivers in 2011
Demand: Key metros likely to remain subdued purely on a/c of run away capital prices. Buyers shall continue to
remain on the sidelines waiting for corrections to purchase homes. Commercial and retail segments to see an
increase in absorption in 2011 vis-à-vis 2010
Supply: New launches would be focused on the mid income segment in 2011 as compared to luxury segment in the
last six months. Focus shall also shift from new launches to scale-up in execution
Pricing: While prices shall remain stagnant across micro mkts which have seen an up-move in recent months, key
metros such as Mumbai & NCR may witness marginal declines (post a ~6 month lag). The Bangalore market could
witness a marginal increase
Liquidity: The recent housing scam and monetary tightening shall result in a slowdown in realty lending by banks.
However, we believe India’s top developers shall continue to be able to access funding, albeit, at a higher cost
(Banks: 12-13%; NBFCs: 17-20%)
Micro-markets: Policy decisions in some of the micro-markets (e.g., MMR) would be pivotal and could force
developers to re-align their strategies
Risks: While a 50 bps increase in policy rate is assumed, absolute prices are a more important factor for demand
vs. interest rates. Oversupply in select micro markets and policy changes (e.g. SEZ policy, FSI/ TDR norms, etc)
remain the key risks to monitor in 2011
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