India is the ninth largest construction market in the world according to a Global Construction 2020 report by Oxford Economics. Growing at an estimated cumulative annual growth rate of 8.9%, it is expected to become the third largest market by 2020 and is globally acknowledged as an extremely lucrative business opportunity.
As far as IPOs are concerned, out of the 132 IPOs lined up, the largest number -15 -are from the real estate sector.
IIFL Venture Capital Fund, the private equity arm of the India Infoline group, is reportedly raising Rs.500 crore for investing in real estate.
It is not just strange, it is ironic. When the facts and indications are all misleading, investor in the Indian market have no choice but to keep the fingers crossed and it is precisely the reason what is hurting the realty stocks, finds Track2Realty.
Analysts are worried and do not see a rosy picture ahead in 2012. According to them real estate companies planning IPOs in 2012 may experience a lack of enthusiasm on the part of investors.
Hindustan Construction Company Ltd plans to sell part of its real estate and infrastructure units, as well as aggressively chase outstanding payments with state-run companies to reduce its debt, a senior executive said.
In 2011 six big ticket real estate IPOs was expected to raise over $2.9 billion or Rs.13,000 crore. Emaar MGF, which could not raise money in the capital market in consecutive attempts even when market conditions were conducive.
Fitch Ratings’ outlook for 2012 for the Indian real estate sector is negative due to weak overall demand and higher construction costs, which are likely to continue to squeeze margins.
Rising cost and falling transactions are taking their toll on the property market in both the Delhi-NCR and Mumbai.
With the market set to bottom by out by the second quarter of 2012, we will see the beginning of a recovery in the city’s residential real estate fortunes by the second half of the year.