India property prices to come down

Indian property prices, which had taken off like jet planes, appear to be losing altitude after bad debts owing their origin to real estate brought down the US financial market to its knees.

Marketmen see prices cooling and projects being held up for want of cheap funds, but don't expect the market to crash.

Raising funds from American and Western European investors, who accounted for a bulk of overseas money coming to India, will be difficult. "Developers will have to look at new avenues like middle-east and Korea," said Global realty consultant Jones Lang LaSalle Meghraj country head Anuj Puri.

The first to be hit would be commercial property prices, although a correction in residential segment too is expected. Rates had almost doubled in the three years leading to 2007, when interest rates started hardening.

"Negative sentiments from events like these (collapse of Lehman Brothers, Merrill Lynch and others) will have a bearing on the banking and financial services' real estate requirement in India," Puri said.

"It is not a big exposure considering 50 million sq ft of office spaces transacted every year in India," Puri said, adding that there would not be much of a direct impact because of the two firms going down under.

Prices of properties in a good location would not be affected much, said Amit Sarin, Executive Director of Anant Raj Industries, in which Lehman held 1.8 percent stake.

However, those in less prime areas could feel the pinch, said Sarin, whose company is predominantly into building IT space.