India Real Estate Outlook: Everybody Bearish, Smile

Monday, November 17, 2008

 Real Estate:  Dust to Dust, Ashes to Ashes
 Sector is in a mess with heavily leveraged players like HDIL and Unitech the most vulnerable.  However, while the industry has resisted so far, existing properties are fetching discounted prices and new launches are likely to be deferred by all entities especially Purvankara, Omaxa and Parsvnath.
CLSA India:Investors are likely to start cancelling their bookings and genuine sales come to a virtual standstill in anticipation of decline in prices and tight liquidity scenario.  Consequently, sales of Residential property could turn negative in F09.

Such a scenario is not built into too many earnings forecasts for Real Estate concerns in India.  It is CLSA's view that Real Estate prices have to correct by a minimum of 30 to 50% and for that reason alone the land banks of Real Estate companies are nothing but over valued parcels of land.
From IndiaBulls:  The Real Estate Income Trust (IPIT SP) is trading at 16cents compared to its June IPO price of $1.0....this discount is factoring in delays and falls in rentals.
Macquaire India Realty: Money for nothing  Dire Straits- credit crunch hits hard
The Lehman Brothers bankruptcy and the Merrill Lynch acquisition have raised concerns about a possible slowdown at two of the largest investors in Indian real estate. Our channel checks with private equity industry sources indicate that deal flow is likely to slow as we enter 2009
DLF to sell-off Noida IT SEZ :  First, participate in nonsensical land grab; second sell when there is no buyer in sight.  Research houses attributed zero value to SEZ's of Realtors till they were sold for good reason.  And now unconfirmed reports that DLF is looking to sell its 10 hectare IT SEZ in Noida.
I think a liquidity event is likely in the Real Estate my numerous previous posts...type 'liquidity event' in the search blog box.

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