Nov. 19 (Bloomberg) -- Property prices and rents in India may be poised for a ``major correction'' as supply of affordable housing remains limited and office space exceeds demand, according to Goldman Sachs Group Inc.
Prices and rents in some regions could fall as much as 30 percent, Goldman said in a report today. Retailers may find it tough to remain profitable at current rents, the note said.
``We believe affordability is low in the residential market with a lot of supply targeting high income households,'' analysts Vishnu Gopal and Shruti Gandhi wrote in the note. ``We believe the risks of a major correction in property prices and rentals are mounting.''
Sales have dropped as the global financial crisis pushed stocks toward their worst year on record and borrowing costs rose, putting pressure on developers to slash prices. After growing at an average of almost 9 percent over the past four years, expansion in India's $1.2 trillion economy may slow to as little as 7.5 percent, the central bank said last month.
Goldman reiterated its ``cautious stance'' on the industry and maintained its ``sell'' ratings on DLF Ltd., the biggest developer, as well as for Parsvnath Developers Ltd. and Sobha Developers Ltd.
The Realty Index of the Bombay Stock Exchange has dropped 86 percent since Jan 1. DLF has declined 79 percent this year.
