The residential sector will lead the revival of India's reality industry as it will see a surge in demand by 30 percent by 2009-end, according to an industry lobby survey.
'Although the real estate sector has started showing some signs of revival, a majority of the industry experts expect the residential segment to recover by the end of 2009 with a 25-30 percent renewal in demand,' said the survey report by the Federation of Indian Chambers of Commerce and Industry (FICCI).
However, the commercial and retail segments will take some more time to recover.
The commercial and retail segments are expected to pick up after the third quarter of 2010, the report said.
'Affordable housing seems to be the flavour of the day as more than 34 percent of the demand in the residential segment is in the price bracket of Rs.5-Rs.15 lakh,' the survey said.
Demand for houses in the range of Rs.15-Rs.25 lakh will go up by 26 percent, while those in the bracket of Rs.25-Rs.40 lakh will see demand rising 22 percent, the chamber said.
Properties priced between Rs.35 lakh and Rs.50 lakh will see 12 percent increase in demand, while the houses priced above Rs.50 lakh will see a mere 6 percent rise.
However, banks are still cautious in lending, and prefer lending to credible developers, the survey said.
The real estate mutual funds have not taken off well in the Indian market due to 'lack of awareness and ambiguous policy framework'.
The taxation and exit-related issues need to be resolved and the guidelines need to be comprehensive and transparent for them to do well, it added.
'Lack of standardised policies is the most serious issue. Multiple state laws hinder and delay the execution of projects. Absence of single window clearance emerged as the second most critical issue,' FICCI said.
Unclear land titles pose a major challenge in the development of real estate sector, it added.
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