Economy and Realty for the Month of April 2012

Healthy office space absorption in 2011-2012 inspite of slowdown in GDP, However 2012-13 seems bleak.

Currently, the top seven cities of India that is Mumbai, National Capital Region, Bangalore, Pune, Chennai, Hyderabad and Kolkata together occupy 389 mn sq.ft of Grade-A office space. During 2010-11, a total of 38 mn sq.ft of new space was constructed in the top seven cities and it was 37 mn sq. ft during 2011-12. Office space absorption in India during 2011-12 was merely 2% lower than 2010-11 despite GDP growth slowing down from 8.4% to 6.9% during the same period. This is in sharp contrast to the popular belief that 2011-12 was a dull year for office market in terms of absorption. Healthy absorption rate ensured a drop in vacancy level to 21% by the end of Q4 2011-12 from 27% in Q4 2009-10.

Share of Banking & IT sector falls in absorption while manufacturing sector has witnessed an increasing trend over the last two years and contributed 19% in total absorption during 2011-12, higher from 13% in 2010-11. GDP growth of service segment is estimated to grow at 8.8% during 2012-13, much higher than industry segment growth of 6%. Absorption of space during 2012-13 is expected to be considerably lower than the previous two years and this will make it all the more challenging for developers to maintain existing levels of rent.

However, the latest move by Reserve Bank of India (RBI) of reducing the repo and reverse repo rate by 50 basis points (bps) each could provide the much needed impetus to the economy and help in reviewing the demand scenario for office space in the coming quarters.

SBI May Give Reason to Cheer

Bank to every Indian
Photo by RamN
March 25, 2010

After the budget 2010, SBI brings a gleam of hope for home loan borrowers as it plans an extension in the home loan relief plan.

SBI, the State Bank of India, one of the largest lenders in India, has indicated that although there would be slight changes, but it may still consider continuing its much-talked-about 8 % home loan scheme. One of the top officials of SBI said that even though they bring modifications in their products, which tune with their liquidity position normally they don’t kill any product. However, the banking major have not yet formally announced the extension of the bid whose tenure gets over on March 31.

The corporations like ICICI Bank and mortgage lender Housing Development Finance Corporation which are the major competitors of SBI also copied this scheme of SBI but later withdrew them because the RBI disapproved such products and drying liquidity.

But according to the officials it is one of the best home-loan plans in the market since it assisted other sectors to grow like cement and steel. It is a very successful offer. It also tremendously contributed to the overall economic growth.

However, the ‘teaser’ schemes were not liked by the Reserve Bank since it was related with the ability of customers to pay the rates of interest when it got back to the usual level after the period of this scheme expires.

RBI Deputy Governors, Usha Thorat and K C Chakrabarty, had openly expressed their concerns about the scheme. “Teaser rates…