Property price rise not a 'bubble': FICCI

New Delhi: A survey by the industry chamber FICCI shows an overwhelming majority of CEOs and CMDs do not foresee collapse in the prices of real estate and disregarded the rising trend as a 'bubble'.

The survey predicts the real estate sector is likely to witness about 5-10 per cent increase in prices across all categories of cities in the coming 4-6 months with the growing number of new-buyers.

Of the 24 leading real estate consultancy firms, developers, construction companies, builders and financial institutions, 67 per cent respondents did not foresee a sudden collapse in the property prices.

Approximately 80 per cent of the respondents supported the view that rise in prices was perceived in the commercial and residential segment of Tier-II cities.

The survey indicated that the residential sector is more speculator-driven as compared to the commercial sector, which is more end-user driven.

"Residential property is speculator-driven was a view expressed by 41 per cent of the respondents with about 29 per cent pointing out that it was end-user driven," PTI quoted the survey.

About 75 per cent of the respondents felt that commercial property was end-user driven, while around 8.3 per cent of them felt that commercial property was speculator-driven.

Almost 90 per cent of the respondents supported the view that IPOs would help in making the sector more organised. They said it will drive in higher corporatisation, accountability and transparency.

Close to 60 per cent of them believed that IPOs will lend more credibility to the sector.

About 67 per cent of the respondents said that the Foreign Direct Investment, which introduces greater liquidity, aids corporatisation and encourages latest technology and management systems, would contribute to increase in the property prices.

The survey showed that the residential segment has emerged as the most preferred investment opportunity for the real estate developers.

The second choice was the commercial sector followed by retail sector and the least preferred option was SEZs as there are still a lot of ambiguities in the SEZ policy.

Around 50 per cent of the respondents of the survey said rise in interest rate would lead to decrease in the sale of residential property.