Real estate price correction begins

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New Delhi: The Indian real estate market is likely to witness a 15-20 per cent drop in prices of residential space in Tier I cities over next one year where the prices have gone up rapidly during last 12 months, according to industry experts.

"We expect that there will be a price correction of 15-20 per cent in the residential segments in over-heated markets like metros during next 12 months," Ernst and Young- Head real estate practice Ganesh Raj said at Indo-US Economic summit.

“Price correction has already started in Noida in certain pockets,” he said.

"After a certain price level, it will be a buyers market and developers will have to cut their prices," Raj adds.

Hines Real Estate Managing Director Daniel MacEachron said price correction was expected in the land prices in the major markets (Tier I) over the next 12-18 months, which would lead to fall in the real estate prices in the housing sector.

"The rising home loan rates would also lead to correction in the prices in residential segment," MacEachron said.

DLF Ltd Advisor J K Chandra said some sort of correction has happened or would happen where the prices have gone up disproportionately.

However, Chandra added that going forward the rate of increase in the real estate prices would not be as high as it has happened in the past 12-18 months.

Later speaking on the sidelines, Chandra, who is also a Director of DLF Laing O'Rourke, a 50:50 joint venture between DLF and UK-based Laing O'Rourke, said that the JV has already started its operation with the company taking up five projects in Noida, Gurgaon and Bangalore.