The stocks of real estate companies reflect the sad state of what the real estate is in India today.DLF,Unitech,et all companies are doing debt restructuring from 500 crores to 10000 crores, and they dont have cash to pay back. They dont even now have the support of the PE and FII investments which they had back in 2005, so they have no option but to restructure loans or sell the inventory at a price sooner or later.

DLF offered its shared at around 500 ,listed close to 1000 and now it is hovering around 300, Unitech I dont need to say much that it has depriciated by 90% from 500-600 levels to 70 levels. All investment bankers,MFs,brokers,FIIs understand the future for Real Estate and that is what is being reflected in the stock price.

So, as an "intelligent investor" , please invest in pharma/power/capital goods and stay away from Auto/Real Estate as they are interest sensitive cyclical sectors.

The stock market is almost near its all time high but the real estate index is close to 20-25% of what it was in 2007, isnt that telling you the story?

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  • Good point .... but sadly no takers

    All Buyers are blind ... you can never make then understand the reality......
    Otherwise why Mumbai is costlier then most cities in the world .... per capita , population .... etc are baseless points
  • No, it is just that there is no real estate index in India, a recent one "RES" has been started but it is just 1-2 years old for Mumbai and 1 year old for other cities. The problem with real estate in India is nobody wants transperancy - the builders,politicians, and to some extent the people of India as well.My small complaints of Mutual Funds and Insurance are now easily taken careof by SEBI, and we immediately need a regulator in Real Estate which the governments have been delaying since last 10 years.

    Also, people dont really understand how the stock market behaves, it always tells you what is coming ahead, so even if you dont invest, you know which sectors will do well in near/long term.

    This is the reason, middle class always stay that way, and struggle through their lives. I read once in a book - "IT IS EASY TO EARN MONEY, BUT IT IS VERY DIFFICULT TO DIGEST IT" ---

    Only banks and builders have become rich with the monies that you have earned or will earn rest of your lives, the house you buy on EMI is not yours unless you pay every penny you have borrowed, so I dont know how a house purchase makes you rich ?

    This is exactly my point for all the readers here.
  • Growing economic and inflationary pressures saw Delhi and Mumbai slip from their third and fifth place in last year’s list of real estate
    investment opportunities to 15th and 12th position respectively in 2012, said a real estate investment forecast Emerging Trends in Real Estate Asia
    Pacific 2012, which is jointly published by the Urban Land Institute (ULI) and PwC.

    Bangalore, on the other hand, maintained its position as the tenth most favoured investment destination. “Bangalore’s organic, growth driven market and ability to buck mega trends has helped it retain its credentials as a stable play and maintain its position on the list,” said the report.

    According to the report, the vacancy rates in Mumbai are likely to remain stable through the close of 2011 and into 2012. Absorption will again be positive next year, but rental values remain questionable as economic and inflationary issues continue to linger. “In New Delhi, inflation has continued to spike costs, and it may not be economically feasible to build there. Ongoing funding problems do provide investment opportunities for private equity investors,” said the report.

    “In the medium term there is a secular steady state trend given India’s favourable demographies. Even post 2009, when the real estate markets were bottoming out in India, there were bursts of demand at every price correction. This clearly demonstrates latent demand. However short-term pain is here to stay until the regulatory processes get streamlined, approvals resume, interest rates improve and more liquidity gets introduced,” said Jai Mavani, leader, infrastructure and real estate at PwC India.

    However, the long-term solution can only come through reforms, both regulatory and financial. The real estate regulation bill, that is on the anvil, is a step in the right direction although the content needs some tweaking to prevent over regulation.

    The report maintains that India’s consumption driven economy makes it a safe destination for real estate investment. With the market expecting to bottom out sometime in the last quarter of this fiscal, debt funding drying up and recession expected to cut inflationary pressures on commodities, it will translate into attractive investment option for private equity players looking to get India back on their agenda.

    With sales volumes stagnant and rising labour and commodity prices also squeezing finances, developers also are now expected to turn to private equity funds as a last resort. Incoming capital is expected to rise in the following year. If it does, it will represent a significant turnaround for a market that foreign private equity investors have largely shunned since the onset of the global financial crisis.
  • Originally Posted by frugality
    Good point .... but sadly no takers

    All Buyers are blind ... you can never make then understand the reality......
    Otherwise why Mumbai is costlier then most cities in the world .... per capita , population .... etc are baseless points

    I can understand why Mumbai is costlier in the world, because most successful persons, celebrity , buissnesmen live in Mumbai, and there are hundreds of small business men (& thousands of other supportive people) who are doing business from Mumbai but get profit from all across the India. That is why Mumbai is financial capital of India, and property prices are never gone fall in Mumbai but may become stable for long time to come.

    And Pune is paying the price for being close to Mumbai, as 90% of the flats are being baught by investors from Mumbai and other cities of India. This may continue for some time, but sooner or later this RE bubble will burst, as it happened in China. India is not learning lessons from China.