[Property Bazaar]: A Scenario Update of Indian Realty Sector as in Feb' 09!

BnM>>The global sentiment on the current financial meltdown no doubt plays a direct or indirect impact on the real estate sector as a whole, and property sector in India is no different. The stock market listed big boys of Indian realty sector, viz., DLF and Unitech are visibly bearing the brunt of this global aspect presently with their net worth being marginalized day by day forcing these companies to be more realistic in valuations and property price pegging.

Other stock market listed big shots like Ansals Housing, Omaxe, Parsvanath, Mahindra Lifespace, Shobha Developers, and the likes are also feeling the heat due to a combination of receding demand, unavailable/ negligible/ expensive fund borrowings and diminishing working capital margins on existing as well as future projects in pipeline.  It could not have been worst for them and the entire realty sector than this when compared with the recent past.

Lets wait and watch to see which way the wind blows from hereon. The tussle is still on between the desires of a genuine end user (who wants to buy a property for own occupation, or who want to buy a house as a family investment for his/her children and not the ones who are mere speculators and cartel players);  and the likes of realty companies/ builders/ property developers/ realty middlemen/ agents/ etc. And the core of this tussle lies in the fact as to which way the property prices/ valuations swing from hereon...  --- towards the realistic and affordable levels as desired by the common man or again towards the speculative regime as it was in the last 3-4 years.

Hmmm... lets wait and watch for some time...  thats perhaps the best option for the time being!

[Note: Reproduced herein below is a latest news report that appeared today on MSN-India's website. The item is reproduced with the intention to only share the information]

Source : msn.co.in (dt 12/Feb/09)

Housing prices down 30% in 4 months: JLLM

New Delhi: The prices of houses have come down by up to 30 per cent over the last four months but weak consumer sentiments continue to prevail resulting in subdued demand, says realty consultant Jones Lang LaSalle Meghraj (JLLM).

Affordability metrics for homebuyers have started to improve since October due to the sharp correction in property prices, reduction in mortgage rates and smaller unit sizes per apartment, it said.

"Currently, transaction prices in most markets are down by 25-30 per cent across the board," JLLM Chairman and Country Head Anuj Puri said.

Weak Diwali sales last year and a "virtual standstill" in incremental credit lending during October-December period of the current fiscal have forced developers to mark down their asking rates, he added.

"Price corrections are more pronounced in new launches than existing projects, which are mostly sold to end-users or investors and hence are cost covered," Puri said.

He, however, said demand for housing properties remains subdued with end-users postponing their home-purchase decisions given an uncertain job market and expectation of further price corrections.

The consultant said though many developers have shifted their focus towards building affordable houses in the last few months, but due to thin margins on account of high costs of existing land inventories (mainly acquired over 2006-08) and the current level of construction costs, companies are finding it difficult to remain afloat.

"JLLM expects Rs 1,800-Rs 2,000 per sq ft as the bare minimum pricing level in the current market," Puri added.

Source: PTI

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