Property to lead India rebound

RESIDENTIAL real estate will lead the recovery of India’s wounded property market in 2010 thanks to accelerating economic growth, lower interest rates and improved liquidity, Indian ratings and research agency CRISIL said Wednesday.

Prices for commercial and retail space will likely remain weak through 2010 because of oversupply and slack demand, CRISIL said in a new study of 10 cities across India.

‘Residential real estate is where we think by 2010 we can look for some kind of recovery,’ head of research Sudhir Nair said in a conference call with reporters. ‘There is a significant overhang of supply in commercial projects. … You can’t see a lease rental increase for a couple of years in this market.’

India’s property market, like many around the globe, boomed from 2005 to mid-2008. Average prices of both commercial and residential space more than doubled during that period, according to CRISIL.

In some high-demand places, like Mumbai, the nation’s financial capital, commercial prices went up 231 per cent, while residential prices rose 121 per cent.

Since July, prices have softened. CRISIL predicts commercial lease and rental rates will fall by 38 per cent from early 2008 peaks. Residential prices have already fallen by an average of about 20 per cent, and will likely correct another 10 per cent, CRISIL said.

But falling prices have done little to redress fundamental mismatches of supply and demand in the residential market, Nair said.

From 2009 to 2011, an additional 110 million square meters of residential real estate has been planned – far more than predicted demand of 47 million square meters – but most of that has been targeted at high-end luxury properties, where demand has withered.

What India needs is affordable housing close to jobs. Developers who snapped up pricey land in urban centers during the boom, however, can’t afford to build cheap housing there and instead are sitting on the land, Nair said.

Source: Straits Times, 24 June 2009

Bed-and-breakfast gains popularity in Delhi

(NEW DELHI) As New Delhi prepares for the Commonwealth Games in 2010, a shortage of hotel rooms has left organisers scrambling to house the 100,000 spectators expected to descend on the Indian capital.

Planners insist that the 39 planned hotels will be finished by the time the Games are due, but the numbers tell a different story. Only 19 of the hotels have begun construction work, according to a parliamentary report, which predicted a shortfall of 14,000 hotel rooms. The situation has forced the government and tourism officials to look elsewhere for accommodation, and private homes are topping the list as part of a bed-and-breakfast scheme that has proved popular with homeowners who have room to spare.

More than 300 houses and 800 rooms have been registered as bed-and-breakfasts in the year and a half since the plan was launched, according to the Delhi Tourism and Transport Development Corporation (DTTDC), which is responsible for the programme.

Most applicants live in the posh southern and central parts of the city, where large, landscaped houses in gated communities are nestled among plenty of green space and upmarket shopping areas. Many are older couples or retirees who have extra space and time because their children have left home.

Tourism officials also hope promoting the more personal homestay option rather than costly luxury hotels will boost flagging tourism numbers, which have declined steadily in recent months due to the global financial meltdown and November’s Mumbai attacks.

The bed-and-breakfast concept, while popular in Europe and North America, has taken time to catch on in India, and tourism officials say the Commonwealth Games present an opportunity.
‘Necessity is the mother of invention. In India we had never thought these kinds of schemes can work,’ said Vijay Thakur, president of the Indian Association of Tour Operators (IATO), which suggested the bed-and-breakfast plan to the government.

While the focus is on the Commonwealth Games, Mr Thakur said there was wider potential for attracting tourists ‘who want to see India on their own and experience Indian hospitality’. Various government promotions mean the concept is ‘slowly and steadily picking up’, despite some initial teething problems, said Pervez Hameed, who runs the three-room Delhi Bed and Breakfast with his wife and mother.

Mr Hameed registered his three-storey home in south New Delhi in 2005 under a previous government tourism programme after stumbling upon another bed-and-breakfast in the city. ‘I didn’t understand much about it. I thought it was like a hotel,’ he said. ‘But then I did a Google search on it and it appealed to me.’ – AFP

Source: Business Times, 10 Mar 2009