Detailed Analysis on Indian Real Estate - From Edelweis & CreditSuisse

Key points from the report are ;

* Volumes are closely linked with GDP growth and real returns on properties
but share a weak relation with interest rates

*Down cycles in real estate cycles tend to give up their entire gains (in real terms) of the
preceding up move.

*Implications for Indian real estate – an additional correction of 35%

* Impact on Indian developers:
-Negative real returns on property are likely to drive property investors to exit holdings,
keeping prices under pressure, keeping large project launches by developers at bay
- Developer volumes and sales are likely to remain highly subdued over an extended period
of time and debt servicing will get increasingly onerous for developers

* Capitulation, though delayed, is likely to return to haunt the sector

* Volume recovery is likely after GDP recovery with a 1-2 year lag

http://0301.netclime.net/1_5/285/2f0/21c/Real%20Estate%20-%20sector%20update-Feb-09-EDEL.pdf

I am not saying the market is going to behave as exactly stated in the report; good to know the trend across many geographies. People should understand that real estate (particularly in India where no professional cos., data, regulation) can not be treated(speculated) like securities.Its just a redistribution of capital from one hand to another; essentially zero sum game.

If anyone who worked in the IT/Finance for the last 5 years and saved money conservatively like the old generation; they need not worry about any recession/lay off and would be able to survive for more than 10 years in any medium size town. Because of the delusion and madness; all the capital flowed from US/UK/Europe finally ended up on the hands of politicians.