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Construction : Web Exclusive | May 2013 | Source : Construction Update

Weak demand may continue for real estate: Reports

India’s real estate market is likely to continue to remain sluggish in the quarter ending June 30 and developers may have to drop prices to revive demand for offices and homes, according to industry reports and analysts.

According to a May 6th report by industry lobby group, Associated Chambers of Commerce and Industry of India or Assocham, the real estate sector remained weak in the year ended March 31 as investors, buyers and tenants kept away from a market that is bearing the brunt of delays in approvals, rising construction costs and high interest rates. New investments in the real estate sector across India slumped by about 55 per cent in the March quarter to Rs.42,000 crore from Rs.92,600 crore in the corresponding period last year, say the Assocham.

Slowing economic growth over the past year continues to take a toll on rental demand, according to a commercial property survey on May 7 by the Royal Institution of Chartered Surveyors (RICS) India, a qualification and standards body for the real estate and construction sector.

The supply of office properties from developers is likely to increase further in the April-June quarter. The rental market saw demand rising modestly in the first three months of 2013 but the development starts remained broadly flat in first quarter (January-March) of fiscal 2014, with anecdotal evidence suggesting financing is still an issue, the survey noted.

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