Realty sector has corrected 18% in last one month after we had posted and this sector has been in the midst of crisis in all parts of the world as Human behavior across Globe has been one, land will appreciate and Land is scare and can’t be expanded made Realty investor pay huge premium and in time of liquation many realized that land as investment is held by everyone and no buyer prompted panic sale which caused Sub-prime and now cause of Dubai World.
Experts say, “THE leveraged asset purchases of Dubai-based wealthy non-resident Indians in the past few years may begin to haunt them, as the collapse of real estate prices in the emirate prompts calls for additional funds as margins which may force them to sell some Indian assets”.
Realty sector has raised huge QIP and many IPO are planned in that sector and any small fear will cause the sector to face more hardship and there are indication that high Indian growth will lead to tightening by RBI which may push interest rate.
http://akprabhakar.blogspot.co
BSE REALTY (4315) P/E=38.75
- Realty Sector has been the most speculative with retail interest @ maximum and highly valued sector which corrected from high of 13848 in Jan2008 to low of 1297 in March2009 whopping 90% correction and almost tripled from low of March2009 and the recovery didn’t cross 28% of the fall lowest in sectoral index.
- Around last post index was 4315 and P/e 38.75 and now it is down 15% and P/e is 55.30 which gives indication that sector is still highly overvalued and after correction also it doesn't offer any value as results were very bad.
- Builders, wanting to make a killing during the Dussehra-Diwali festival period, upped prices and killed an opportunity. Buyer inquiry was mistaken for the return of good times. But unrealistic prices has put off consumers. http://
businessworld.in/bw/2009_10_ 24_High_Prices_Pull_Down_ Sales.html# - Realty companies failing to raise fund would force them to sell property @ huge discount
- Nearly a dozen developers have announced plans to raise a large amount of capital from the primary market and most of them are raising equity to pay off debt rather than use the proceeds to fund growth. While a company has full discretion over the use of IPO proceeds, as long as it makes full disclosures, hitting the market to raise money to settle debt primarily is a sign of the precarious financial health of some of the real estate developers. http://
economictimes.indiatimes.com/ High-debt-poor-cash-flows- spell-trouble-for-realty-IPOs/ articleshow/5286204.cms
The Grand QIP Party Of Realty
High Debt, Poor Cash Flow Spell Trouble For Realty Cos
