MUMBAI: The giant cranes that once worked long into the Mumbai night are still, the roar of concrete mixers has dulled, and hundreds of migrant workers have gone home.
A slowing economy, high interest rates, tighter credit and a falling stock market have left developers in India's financial hub scrambling for cash and delaying or cancelling ambitious commercial and residential projects. The Mumbai skyline has been transformed in recent years as developers rushed to build gleaming office blocks, swanky apartment towers and sprawling malls. Land prices quadrupled in some areas in the last three years, and commercial and residential spaces in Mumbai have become among the world's most expensive. Rising incomes, low interest rates, a soaring stock market and foreign investment fuelled the boom. Now, some fear a bust. "Besides the liquidity crunch, there is a real crisis of confidence," said Anshuman Magazine, managing director for south Asia at real estate consultancy CB Richard Ellis. "The boom permitted more people to own homes, offices to expand, hotels to add rooms. If there is a prolonged slump, we will see empty buildings and half-built constructions. It will be a big setback ... we're already so far behind in infrastructure." Land and property prices could fall by between 15 and 50 percent, with some distress sales expected in the months ahead, analysts say, with a sustained slump having a serious impact on the already stretched infrastructure of the city and the country. With half India's wealth tied to property, according to CLSA estimates, the potential impact on banks and the economy is big. FEW ENQUIRIES Economic growth of about 9 percent a year in the last three years had boosted demand for hotels, offices, homes and malls, as well as roads, ports and airports. After India eased rules on inward investment in the construction industry in 2005, foreign investors including Citigroup and JP Morgan pledged some $20 billion for the property market, and developers were also buoyed by easy credit available. Now, much of that foreign money may not arrive, while banks are averse to real estate lending because risks are perceived to be higher, ratings agency ICRA said. Private equity firms and global banks, which had hankered for slices of big realty projects, have turned off the tap, while banks are subjecting home loan applicants to greater scrutiny and demanding bigger margin requirements, scaring off buyers. Enquiries for office space have slowed all year, and rentals even in such prime locations as Nariman Point in south Mumbai have fallen by 10-15 percent, CB Richard Ellis estimates. Tight credit, small bonuses hit India real estate Source : Economic Times --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
