New Delhi, June 25, 2007
The Economic Times

After mergers in the Indian sky, it is now time for consolidation in real estate sector, which is feeling, constrained by rising interest rates and falling inflow of funds, industry experts feel.

"For big developers there is no impact of rising interest rate but small players are finding it difficult to raise money for their proposed projects. They would need to sell their projects to big developers," said, Ansal API Vice-President (Marketing) Kunal Banerjee.

Distress sale of projects is already happening, he said, adding the industry would witness more of it in days to come.

Seeking to check excessive capital inflows in real estate sector, the government last month decided to bar developers from raising money abroad to develop integrated townships.

Though tightening of External Commercial Borrowing (ECB) norms was related to only integrated townships, the spillover effect is felt across the sector.

Besides, RBI has raised risk weights on housing loans, followed by interest rate hikes to curb demand in the sector.

Edelweiss Capital Senior Vice-President George Mathew pointed out that RBI has been squeezing all sources of funds gradually to rein in inflation and a possible correction in this sector could be in the offing.
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