HDFC is likely to raise home loan rates by 50-100 basis points this week.RBI’s higher provisioning requirements for real estate loans for banks were taken to ensure stability in the market prompted by genuine regulatory concerns of higher asset prices. Barely 50% of the listed companies comply with clause 49 of the listing agreement relating to corporate governance, though it’s over a year since this has been made mandatory. And only 5% of the listed companies in India have a depositors and officers policy as against 90% in the US. As for real estate business in India, it is not very transparent.Most real estate companies in both emerging markets and in domestic markets often are quoted below the issue price.
High PEs of real estate companies are on account of high-land valuations they have and not because of governance practices. Regulators are often concerned about asset bubble. Real estate prices go up and down, and one has to learn to live with them.