One may be tempted to draw parallels to the US real estate boom, which has now shown signs of a painful slowdown. The outlook for appreciation in 2007 is relatively fl at out there, while at least a third of American metro areas are expected to see slight declines in housing prices. According to RREEF (research firm with Deutsche bank), capital allocated in real estate in US in 2007 is expected to be less than its value in 2006, while in EU, an additional $70 billion is expected to 
be invested. Investment in Asia Pacific reached $63 billion in 2006, five times its value since 2000; and is expected to shoot up to $366 billion by 2010.
One area that shows a huge promise, even to us, is the SEZ space. Just 8-9 SEZs are currently operational, while around 230 SEZs are formally approved. But critically, the major fault with the sector lies with the government, which, instead of initiating a long standing public-private partnership to plan economic growth & ensure coordinated development of housing for masses & development of commerce, has limited itself to using the ‘interest’ stick as an electric control rod.
Unless the government reworks its understanding of structural macroeconomics, the real estate sector, uninhibited during both boom times and depressions, could lead to India’s economy being exposed to extremely dangerous vagaries of yo-yo economics, where markets rise and crash very fast and during very short periods. Real estate was never meant to be a speculative industry; unfortunately, that is what it has started becoming, with players buying and selling property in order to make money over the short term. Can our government put an urgent stop to this? We haven’t got a reply from them; if you do, call us.
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Source: IIPM Editorial, 2008
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