The US credit rating cut and uncertainties about Europe’s debt situation is a cause concern. There can be some potential negatives arising out of this situation.

First, there can be a reduction in foreign institutional investment monies, including those targeted at real estate. Also, a reduced spend on IT by the US, given the slackness of the US economy, may have an impact on the IT outsourcing business and affect Indian real estate at various levels.

Further, overall market sentiments are likely to de cline

However, there are possible upsides to the situation as well.

FFirst, commodity prices -- especially in terms of crude oil -- are likely to come down, and this will help curb inflation.

Second, under the circumstances, the Indian business lobby may now be able to make a stronger and potentially successful case against further interest rate hikes with the RBI.

Third, we can reasonably expect a reverse exodus of funds from the US into India and boosting the country’s potential to effectively capitalize on the inevitable rebound.

Anuj Puri is chairman & country head, Jones Lang LaSalle India

Source: August 09, 2011, Realtyplusmag.com