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Residential property sales in India to drop 20-30%: Fitch ratings

24 Jan 2017 Evaluate

The global credit rating agency, Fitch in its latest report ‘2017 Outlook: Asia-Pacific Corporates’ has said that residential property sales in India are expected to witness at least 20-30 per cent dip in 2017 due to demonetisation impact, as one goal of demonetisation is to curtail undeclared wealth, which will take its toll on home demand. Agency has revised the outlook for Indian housing sector in 2017 to negative from stable. For china, Fitch expects housing sales to decline 15 per cent in 2017.

In its report, Fitch expects residential property sales of most Indian homebuilders to weaken by at least 20-30 per cent this year. It’s not only for India but the agency has kept a negative outlook to almost one-third of Asia-Pacific (APAC) corporate sectors for 2017. It said that growth across Asia remains high by global standards, but has slowed in recent years, particularly in China. Furthermore, external factors, such as the strong US dollar, weak global trade, and political uncertainty in the US and Europe, are presenting challenges.

The rating agency has termed unfavourable policy changes, overcapacity and rising competition among other difficulties posing challenges the countries in APAC. Citing example of steel sector, the report said that Indian government eased import pressure on Indian steelmakers by imposing minimum import prices last year, but capacity utilisation remains low and rising production costs are adding to strains. Further agency has noted that new entrants into telecoms markets in India, Malaysia, and Singapore will put added pressure on incumbents which are already grappling with rising capex needs.

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