Welcome, Guest    
 
Login  Contact Us RSS Feeds
Anitech Infraa
Home
  Add Property                
Register Free to find a Perfect life partner In AnytimeMatrimony | Equated Monthly Installment(EMI) Calculator | Stamp Duty Calculator | Area Conversion Calculator | Know answer for your Taxation query | Ask Legal Advice @ Free of cost | Vaastu Tips
FAQ Sitemap
 
Newsletter Signup
Subscribe for our property news letter



 
 
News Search
Type a keyword to search.



[OR]

Select a city to search property news.


 
 
News Archieves
September 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
September 2008
June 2008
February 2008
January 2008
December 2007
November 2007
 
 
External Links
 ICICI Home Loans
 LIC Housing
 HDFC Home Loans
 SBI Home Loans
 Axis Bank Home Loans
 Tamilnadu Govt Links
adProperty News

     
 
2008 a body blow to the real estate market
Source : The Hindu Property Plus Published On : 2009-01-03 City : Chennai

High interest rates regime, economic slowdown and liquidity crunch cooled off the overheated realty sector and forced cost-cutting measures

What goes up has to come down.

            On a high since 2005, Indian property market descended in 2008 with prices falling by 15-20 per cent.

            High interest rates regime and economic slowdown, coupled with the ripple effect of the US sub prime crisis cooled off the overheated realty sector to some extent, forcing developers to adopt cost-cutting measures, such as deferment of projects, salary cuts and layoff of employees.

            Developers, big or small, faced huge liquidity crunch as both end-users and investors shied away from the market. The sector’s woes got further accentuated from the kind of battering it received at the stock market, with its share price falling like ninepins.

            The fall in sales volume was so sharp that turnover and profit of almost all the companies started to decline from the first quarter of 2008, which became more pronounced as the year progressed.

            “In 2008, the Indian realty sector took an unprecedented body blow.

            There has already been an overall drop of demand to the tune of 45-50 per cent,” real estate consultant Jones Lang LaSalle Meghraj Chairman and Country Head Anuj Puri said.

            He pointed out that the prices of residential units fell by an average of 15-20 per cent across the country and said similar trend was witnessed in rentals for retail spaces.

Discounts

            The slump in demand forced developers to offer discounts and freebies to boost sales. But that did not help the industry, and sought government’s help to come out of trouble.

            The Centre did not disappoint the industry and announced lower interest rates for home loans up to Rs 20 lakh, which prompted the developers to focus on affordable housing.

            It was all well till the end of the last year and realty majors like DLF, Unitech and Emaar MGF were all set to raise huge capital from domestic and overseas markets in 2008 to fund their massive expansion plans.

            But the mood changed within a few months when Emaar MGF had to withdraw its maiden public offer of over Rs 7,000 crore in February because of bad market condition.

            On seeing the fate of Emaar MGF’s IPO, many other realty firms decided not to try their luck in the capital market.

            The development was in complete contrast to 2007 when the sector emerged among the top fund-raiser with DLF leading the chart at over Rs 9,000 crore.

            The realty index on the Bombay Stock Exchange fell by over 82.49 per cent at 2,283.52 points on December 30 compared to 13,037.89 points on January 1 this year. Unitech seemed to be the biggest loser with its scrip currently trading over 92 per cent down since the beginning of the year.

            The shares of DLF, India Bulls, HDIL, Sobha Developers, Omaxe and Parsvnath also crashed between 73 per cent and 90 per cent on the BSE during the review period.

            The crash in the global stock market also forced the country’s two largest real estate firms, DLF and Unitech, to defer their public offer in Singapore indefinitely.

Slowdown

            Even though the developers bore the brunt of slowdown with falling sales and declining profits, they did not shy away from announcing projects with huge investments.

            Among the big-ticket announcements made during the year, Parsvnath said it would invest Rs 60,000 crore in the next five years in diversified areas like SEZs, airports, express ways and retails business, while Nasal API made public its intention to pump in Rs 13,000 crore to develop a huge township spread over 2,500 acres adjoining Greater Noida.

            Facing the heat, the major developers, including DLF and Unitech, which till last year were focusing on luxury housing, diversified their product portfolio to affordable housing. DLF announced to invest Rs 15,000 crore to develop 40,000 units, while Unitech said it would build 10,000 apartments with an investment of Rs 2,500 crore over the next few years. They would offer these housing units in the range of Rs 15-50 lakh.

            Omaxe announced a mammoth investment of Rs 80,000 crore in the next five years to build 10 lakh housing units, which the developer has planned to offer at Rs 3 lakh to Rs 15 lakh.

            DLF had reportedly fired 600 employees, while Unitech lay off 10 per cent of its total 1,700 staff.

            Parsvnath and Omaxe cut salaries of their staff up to 20 per cent and 10 per cent, respectively. Not being able to generate funds, the developers also had to put on hold projects involving big investments or slow down the construction work.

            Better late than never, the government came to the rescue of the industry and asked the public sector banks to announce cheaper home loans up to Rs 20 lakh.

            The four per cent cut in CENVAT also gave a sigh of relief as it would lead to lowering of input costs.

            However, realty consultants are of the view that the recent measures taken by the government would bear fruit in the sector only if it is complemented with lowered property prices and further injection of liquidity.

            Realizing the impact of slowdown in the housing sector on other industries, like cement and steel, and its employment generation capacity, the government is mulling another package to boost the sector, expected to be announced in the New Year.

            Hopefully, the second stimulus package will bring smile to the common man and provide much-needed relief to the real estate sector. - PTI

    Back
 
     

 

More on Anytimeproperty
 
City Based Properties
 
Useful Tools Property News Search Property Calculators Others
© 2017 Any Time Property All Rights Reserved. Home | About Us | Advertise | Testimonials | Help & Support | Contact Us | Careers | FAQ | Feedback | Sitemap
Privacy Policy | Terms and Conditions Developed by Snick Technologies