Real estate in

2. If prices don’t correct,the sector can face complete stagnation. If rates do not drop by 20-25%,lack of demand will make developers put their expansion plans on hold. A clear shortage would emerge over 2-3 years without any buyers or sellers in the market.

3. There are two possibilities regarding market recovery in 2009: If rates drop to levels affordable for buyers,demand will pick up and developers will roll out more projects; even amidst of falling rates,buyers will continue waiting for rates to hit bottom. This will delay the process of recovery.

4. More national players will launch affordable housing projects in 2009. Since different cities have different land and construction costs,developers will have to define affordable housing accordingly.

5. Developers will start adopting a portfolio based approach to pricing. Pricing according to profit margins vis-à-vis land cost has been the norm so far. Buyers are not prepared to consider the initial and appreciated cost of land as a valid component of the buying price. Portfolio level means that at least one-fifth of these developers will now cross-subsidize their internal construction costs and sell project at the prevailing selling rate.

6. Luxury housing will remain muted.

OFFICE

1. Commercial business districts (CBDs) are likely to face vacancies due to global recession. Increasing CBD vacancy rate can put pressure on upcoming/newly developed front-office districts such as in Lower Parel,Mumbai and Nehru Place,New Delhi.

2. Large organisations would move from leased to owned assets. Return of asset ownership. Given the drop in prices and availability of choice,this will be a good time for surviving organizations to announce their new leadership positions through trophy purchases.

3. Anti-outsourcing wave will continue. The active decision-making for expansion by BPOs is on hold for the moment even though sentiment in the US and Europe towards outsourcing remains positive in the long term. The pressure on upcoming and announced projects — especially SEZs — will continue in 2009

4. Extension of STPI concession will impact SEZ developments. IT SEZs will also experience further pressure from the fact that the STPI concessions may be extended for another couple of years. While these concessions are important for IT companies’ survival during the recession,they will adversely impact SEZ developments.

RETAIL

1. Partnership models for growth will become more popular. Given the market malady being faced by developers and retailers alike,models of growth through mechanisms such as revenue sharing would become more prominent

2. More deals are going to get renegotiated as prices drop in over-priced locations. The process of rationalisation should reach a peak by March 2009.

3. Expansion plans for 2009 will slow down considerably for most players. However,projects that incorporate proper zoning,optimal tenant mix strategies and appropriate mall management practices can be successful.

4. There is a decisive upscale in transactions in the hypermarket category. However,the demand is clearly higher for stand-alone high-street locations rather than mall-based locations

5. Supply will weaken further.

CAPITAL MARKETS

1. On-going projects will attract higher interest. There are greater opportunities for investing in projects under development,especially residential projects. What will boost interest in such transactions is that there are no risks in terms of land acquisition and approvals,and lower risk in terms of execution.

2. Non-core real estate assets will infuse liquidity. Judging from the mandates chalked up for execution,2009 will see a good number of capital markets transactions. All business sectors have been hit by the economic meltdown,and now want to generate liquidity from non-core business assets such as real estate.

3. Sale-and-lease-back deals will be in vogue. Cash-strapped owners occupying their properties will sell them and continue as lease tenants.