Tuesday, October 21, 2008

Buyers waiting is causing residential rental to rise

Given the global financial crisis, buyers are feeling that home rates will come down across India as well. Thus, the outlook for India's property market is turning gloomier and aspiring home buyers are hoping that they would get a good bargain if they wait. As a result, residential rentals are rising again. Renting a home is already costing 15 to 20 percent more than it did a year ago, according to Mr. Pankaj Renjhen, Managing Director at consulting firm, Jones Lang LaSalle Meghraj. "Buyers feel that property rates will come down and purchasing a flat will be a more feasible option in the coming months."

The US financial crisis, which saw some Wall Street icons collapse, has already begun to affect India's real estate market, which was betting big on foreign money to sustain its high ride. FIIs had pumped about $4 billion into India's real estate market in the past three years. Given the squeeze in the global credit market, the FIIs outflows have started instead. The absence of liquidity has made it difficult to hold the price for long. With the supply falling short of demand, rentals will continue to rise until property prices fall to what buyers would see as affordable.

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