This week has been a good one for investors in real estate shares, who had seen their investments lose 30%-55% in value over the past six months in the wake of a number of corruption allegations involving the sector.
The finance ministry has asked the central bank to bar real estate firms from seeking banking licences and alter conditions relating to financial inclusion and stake dilution by promoters.
Kotak Realty Fund, the property investment arm of India’s Kotak Mahindra Bank, plans to raise as much as USD 500 million by the second quarter of this year, in a bet on the long term case for property in Asia’s third-largest economy, a top official said.
Mumbai saw a steep rise in property prices during the boom period of 2008. However, the economic slowdown in 2009 led to a property market crash which made itself very tangible in Mumbai in the first quarter of 2009, stabilizing by the middle of year and rising again between the 3rd and 4th quarters.
Blaming use of black money in real estate to archaic laws, India’s largest realty firm DLF has said Prime Minister Manmohan Singh’s emphasis on reduction of stamp duty will help in cleansing the sector.
As the Reserve Bank of India meets to review its monetary policy tomorrow, Thursday, the realty sector is getting panicky that if there is a rate hike the sector may see some more pains in the coming days.
Stocks of real estate companies suffered widespread losses on the BSE today dragging down the sectoral index by 3.14 per cent on all-round selling by funds on fears of rate hike by RBI to curb inflation.
Chinese officials are blaming the speculators for soaring property prices and have announced to build 36 million affordable homes over the next five years.
Shares in developer DB Realty hit a record low on Monday after its Managing Director Shahid Balwa, embroiled in a widening telecom corruption investigation, resigned from his position.
Real Estate may boast off to be the second largest economic activity and the largest employment provider in the economy, but when it comes to have a say in the policy making, they are found to be sulking.