35% Correction from Current Levels - Edelweiss

Edelweiss Research in an exclusive Real Estate Report on the Indian market expects the correction to go further deeper at 35% from current levels. The Indian Realty prices went on escalating without any supporting infrastructure and it is time for the same to face the reality :-) Here is an excerpt from Edelweiss Research,

• Volumes are closely linked with real returns on property and GDP growth
• What is the significance of this report ? Analysts have global property cycles across 15 countries before writing this report. Volumes are closely related to GDP (lag of ~1-2 years) 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%
• Significant reduction of growth in IT sector, job generation across sectors, and funds flow in the real estate sector
• While volumes have reduced sharply, banks' outstanding to real estate has increased even
  as real estate debt has been successively downgraded [Our Comment - We strongly disagree with RBI's soft corner to Real Estate by extending their Loan Restructuring till June-09 which is putting a lot of stress on the balance sheets of Public Sector Indian Banks where we have deposited our hard earned money.]
• 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. volumes and sales are likely to remain highly subdued over an extended period of time.

Sta tuned for the next post which will explain in detail how and why 35% correction as reported by Edelweiss.