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.
Rising cost and falling transactions are taking their toll on the property market in both the Delhi-NCR and Mumbai.
Regulation is required for any industry to function properly and the real estate industry is no exception. The market is being manipulated by the big and influential real estate lobby causing large inequities in resource and product allocation.
The Indian real estate sector has grown rapidly over the last few years, with its stakeholder profile evolving from locally-focused, privately-owned enterprises to increasingly corporatized, professional organizations funded with public capital and having multiple market and product strategies.
As the real estate sector in the country stands at a critical juncture, the performance of this sector will be largely governed by the following drivers.
The Indian realty estate companies reeling under plunging sales and liquidity issues have something more challenging to negotiate-the piling debt in their balance sheet and the banks’ deadline to repay coming close.
Will 2011 carry forward gloom in the realty market? That is the question on everybody’s lips today and the sector seems to be only praying that the worst has been left behind in 2011.
One of the biggest problems afflicting the sector is its high level of debt. The debt load of 11 listed real estate companies stands at Rs.38,500 crore.
A Knight Frank report suggests revenues of real estate companies have dropped by 19 per cent and profits have declined by 70 per cent, over the past four financial years, since 2007-08.
Market forces of demand and supply are the most potent determinants of price and the developments in the real estate industry during year 2011 is the latest example.