Residential demand to lead realty recovery in 2010: Crisil

New Delhi: The real estate market is likely to recover on increasing demand in the residential segment in 2010, driven by improving affordability, steady economic growth and greater liquidity, a Crisil report says.

"The demand in the residential market is expected to turn positive in 2010 owing to improvement in affordability, steady economic growth and greater liquidity, " a ten-city research report on the real estate market stated.

However, a decline in the currently over-priced capital values of all the three real estate segments -residential, commercial and retail - would persist through 2009, it said.

Further, the commercial and retail markets would continue to witness erosion in lease rentals through the next two years.

"Accelerated growth of Indian economy, recovery of global economy, improved liquidity and expected fall in interest rates are key factors that will signal demand revival in the residential segment. This segment is likely to see a much faster revival due to strong underlying demand for housing and supply coming at attractive price points," Crisil Research Head Sudhir Nair said.

Demand in the commercial and retail segment is likely to remain under stress for the next two years owing to excess supply and weak offtake, Nair added.