How will the US rating downgrading from AAA to AA+ impact the real estate sector? Will it have a long-term or an immediate impact? What’s going to be hit, residential or commercial real estate sector?
The good news is that the interest rates might come down in residential segment whereas commercial real estate sector will be hit and the reduction will take place in office space. This is the first time something like this had happened and it is difficult to predict the consequences. It has created uncertainty in the global market and extreme instability across asset classes.
There could be some positives for emerging markets such as India, with the cut of prices of oil and other commodities, inflation too can be controlled adding to it interest rate should come down. Overall, impact on real estate in India could be positive.
The money that pours in will be further used to further for residential development as we already have reasonable capacity for commercial development that still needs to be absorbed. However, in the long run, the commercial property sector take-up maybe an issue, from the demand side from IT/ITeS sector which are closely linked with the USA.