The under-construction Real-Estate projects are already witnessing sharp correction in offer prices that is always a harbinger of a deep economic slowdown.
Equentis Capital, director Vikram Dhawan view on India being on the verge of its own sub-prime crisis following the dwindling rupee and its impact on the investment cycle.
“With investment cycle grinding to halt scuttling new job creations along with widespread job losses in services and manufacturing sectors and a cracked real estate market, India may be on the verge of its own version of a subprime crises. Delinquencies in retail, real-estate and SME assets in Banking Sector may rise sharply as combination of slowing growth, high un-employment and higher interest rates takes its toll," he added.
The under-construction real-estate projects are already witnessing sharp correction in offer prices that is always a harbinger of a deep economic slowdown.
Moreover, the so called “Grey Economy” that has historically underpinned the Real Estate Sector in the past may find the Illegal Gold and Money Business more alluring on account of Squeeze in Gold and Money in the country, not to mention its dispersion before the elections.
History is replete with instances where collapse in Real-Estate sector has resulted in a full blown Financial and Economic crises in a country or a region and India may be staring at one unless a corrective action is taken soon.
"Between the two evils of Collapsing Rupee and Collapsing Economy the later may be easier to mend by reversing the Tight Monetary Policy and cutting interest rates sharply," he explained.
Equentis Capital is a UK-based investment analytic and advisory company with corporate office in Mumbai.