With growing foreign investments in the country’s real estate market, long-term prospects of the sector look brighter, HDFC Chairman Deepak Parekh said.

“Long-term prospects of commercial real estate market continue to be positive owing to growing opportunities in sectors like healthcare, hospitality, logistics and education,” Parekh told reporters in Mumbai.

There is sufficient interest from foreign investors to take part in the country’s real estate market through private equity and foreign direct investment routes, he said.

In Q1 FY’09, about 20% of FDIs were in the housing and real estate sectors, he said, adding that the IPO market may take some time to recover.

The housing segment has enormous demand if the pricing is correct, Parekh said. “Given the huge housing shortage it is unlikely that there will be any saturation in the market for a long time to come.”

Advising buyers not to sit on the fence, Parekh said: “If you find the right house, go ahead and buy it.”

Interest rates over a 15-year period would inevitably move up and down. “So do not overstretch on a loan and maintain a sufficient buffer,” he said.

The present situation may call for some consolidation within the real estate sector and perhaps the need to create innovative financial instruments that could support financially distressed developers to tide over (the present period), Parekh said.