Rupee may return to strength by early to mid 2010

Worried over the sharp depreciation of the rupee? Here's some solace for you. Risk management consultancy major Mecklai Financial has predicted the rupee will begin to rise again by late 2009 and could return to strength by early to mid 2010.

In its latest research report, Mecklai has said that capital flows will take some time to return to 'normal'. However, "we believe that by late 2009, we should see investment flows resume, which should be the trigger for some modest strength in the rupee ...which could return to strength by early to mid 2010."

Even today "the silver lining for India is that the sharp depreciation of the rupee has rendered exports much more competitive. So, too, the dramatic fall in oil will make the trade balance much more manageable," the report says.

Of course, capital flows remain a major negative for the rupee. After having more than quadrupled to $108bn over the previous two years, capital inflows are expected to fall to $31bn in 2008-09. Portfolio flows are forecast to decrease by $10bn, as compared to an increase of $29bn in the previous fiscal, while borrowings are expected to fall from $41bn to $15bn. FDI has been the only bright spot this year, doubling to $10bn for Apr-Aug 2008; despite the crisis, the net figure should easily surpass last year's level of $15bn.

However, with equity prices having fallen 60% this year, as a result of which many, many companies are cheap even compared to their cash assets, and the credit market slowly on its way to normalcy, "we would expect capital flows to begin to show improvement by the second half of 2009," the report says.

The RBI's recent decision to reverse all restrictions it had placed on ECBs, NRI deposits, and FII flows through participatory notes is timely and will boost flows as and when the environment improves. Interestingly, one of the fallouts of this crisis is that "we will have a more liberal external account when the smoke clears."

Of course, the overall balance of payments is expected to be negative in fiscal 2009 and has already resulted in a substantial drawdown of reserves. However, in view of the factors listed above, "we believe fiscal 2010 should see a surplus of around $20bn, which should support a return to a modestly stronger rupee," the report says.

Indian and Gulf real estate market is best

According to a survey conducted all over world on real estate market the following results were taken:

The real estate markets in the Middle East will outperform all other regions in the world while India and China will be the key drivers of the sector in the Asia-Pacific region, according to a new survey.

The 'Investor Survey Sentiment', conducted by global real estate consultancy Jones Lang LaSalle in association Cityscape 2008, the real estate exhibition currently under way here, found that while the UAE will offer the best performing real estate market in the next couple of years, Saudi Arabia will be the next best performer.

The results of the survey were arrived at after taking the views of 350 developers, sovereign wealth funds and high net worth investors, Jones Lang LaSalle said in a statement.

Over 50 percent of the respondents believe the real estate markets in the Middle East will see the strongest performance of any region worldwide over the next two years.

know more about Biggest Indian Festival - DIWALI

India and China, too, have a strong outlook with 20 percent of the respondents believing these two markets will make the Asia Pacific the best performing market.

"Sentiment is a critical component when considering the health of any market," Blair Hagkull, Jones Lang LaSalle's managing director for the Middle East and North Africa (MENA), said in the statement.

"It is an important barometer, a key assessment criteria for any investor and the ideal gauge for considering future prosperity," he added.

The survey, according to the consultancy, is the most up-to-date as it was conducted after in the aftermath of US investment bank Lehman Brothers' collapse.

know more about Biggest Indian Festival - DIWALI

According to the survey, investors in the region are least positive towards west European real estate markets, with only 3 percent expecting this to be the strongest performing region.

Most Middle Eastern investors do not believe the US and European markets will witness a major improvement in performance in the short term.

The Middle East is expected to be one of the regions least affected by current global economic turmoil.

The survey found that though North America would be most affected by the crisis, it could also provide the most opportunities for value purchases over the next two years.

"There is a clear inverse relationship between strongest performing real estate markets and those economies expected to be most impacted by current global economic environment," the Jones Lang LaSalle statement said.

Investors also believe that, apart from MENA, emerging markets like Asia-Pacific and Eastern Europe will also be least affected by economic crisis.

With UAE expected to be the best performing market, investors remain particularly confident of growth in Abu Dhabi.

know more about Biggest Indian Festival - DIWALI

Almost a quarter of the respondents said Saudi Arabia would offer the strongest performing real estate markets, driven by a large and rapidly urbanising population and new legislation, which is opening up of real estate market.

Apart from the UAE and Saudi Arabia, Qatar emerges as the best performing market in the Gulf Cooperation Council (GCC) with less investors expecting Bahrain, Kuwait or Oman markets to perform the most strongly.

"The Gulf region offers strong relative international value with active buyers in the region generally looking to transact at 8-8.5 percent yields for prime commercial operating assets and slightly higher for hospitality products," Ian Ohan, head of investment transactions in MENA at Jones Lang LaSalle said in the statement.

"Investors are looking for strong capital growth in Abu Dhabi, the kingdom of Saudi Arabia and Qatar, reflecting their robust economic potential and more nascent stages in the real estate cycle."

He, however, added that though this was consistent with recent market evidence, it was likely to bow to upward pressure as the cost of debt rose.

know more about Biggest Indian Festival - DIWALI

According to Ohan, asset pricing in the region is increasingly being underpinned by cash flow valuation, reflecting a shift from development-led to capital-based real estate markets.

"We are anticipating greater transaction activity as sellers' value expectations begin to more closely resemble income valuations as debt markets tighten and speculative exit opportunities decline," he said.