HNIs queue up to tap housing mkt,Arun Kumar & Paramita Chatterjee NEW DELHI

Arun Kumar & Paramita Chatterjee NEW DELHI
SENSING a turnaround in the housing market, financial investors led by high networth individuals (HNIs) are moving in for the kill, booking houses to resell them later to end users at a premium, according to realty consultants and developers that ETspoke to.
Typically, investors in the housing market keep a 6-12 month return in mind, whereas an end-user’s demand is a function of job security and affordability. “With demand picking up in the residential space, investors are entering the market rather aggressively,” says Amit Bhagat, managing partner at ASK Equity Fund, a domestic private equity fund.
Financial investors today account for about 30% of all sales in residential units in a sector that’s running short of the peaks witnessed three years ago. Industry estimates show that almost 70% of the newly launched projects in 2007 were bought by investors, leaving the rest to end users.
Given the robust economic growth and the fact that prices are still below the peak level of 2007-08, financial investors are confident that genuine demand residential as project is going to stay or even increase further in near term, Mr Bhagat says.
Investor participation is unlikely to touch the boom period of 2007-08 fiscal, and most are investing in projects where prices are lower than the peak level, says Anuj Puri, chairman and country head of realty consultancy Jones Lang LaSalle Meghraj.
Sales of premium residential units are mostly driven by investors. “Sale of premium houses is not solely dependent on prices but location. Savvy financial Investors are increasingly cashing in on this segment,” says Anurag Mathur, MD at Cushman & Wakefield.
Real estate was one of the sectors worst hit by the global financial slowdown as buyers turned away from the market fearing salary cuts and pink slips, and banks got wary of lending. “The situation is now changing as buyers’ sentiments have turned positive thanks to renewed activity on the employment front and increasing income scenario coupled with benign interest rates of home loan,” says Anil Kumar, CEO & deputy MD ofDelhi-based real estate firm Ansal API.
During the slowdown, prices of residential units had fallen in the range of 35%, which has started now started moving northwards.
However, in extended suburbs and tier II-III cities, prices are expected to remain under control as supply of residential units in these locations still outstrip demand.
Courtesy ET Realty dtd.14-05-2010
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