The Hindu Business Line : Poor response to Mumbai auction weakens realty further

Mumbai, March 19 The signals were already there, but the thin participation at Tuesday’s auction of office plots in Mumbai quite reinforced the downtrend in the realty sector.

The auction bids were much lower than the ones that were received in November for plots in the same area, the Bandra-Kurla complex.

Poor response

The event left its impact on the realty index that ended the day in the red, down 2.14 per cent at 7087.70, even as the Sensex closed 161 points up on Wednesday.

Among the hardest hit was the Bangalore-based developer Puravankara Projects, which plunged 8.73 per cent to touch its 52-week low of Rs 201.30.

Continuing its slide was the Delhi-based realty giant DLF Ltd, which tanked 1.85 per cent to close at Rs 623. The other stocks that took a beating on the bourses were: Akruti City Ltd (2.73 per cent), Unitech Ltd (3.50 per cent), Indiabulls Real Estate (1.82 per cent) and Anant Raj Industries (7.30 per cent). Omaxe Ltd and Parsvnath Developers also touched their 52-week lows today.

“The poor response to the Bandra-Kurla Complex auction on Tuesday seems to have reflected in the performance of the realty index today,” said Mr P.R. Dilip, Managing Director of Impetus Wealth Management Ltd.

Dwindling interest

While the Mumbai Metropolitan Region Development Authority’s auction received only one bid for one commercial plot, another commercial plot and a residential-cum-club house did not have any takers. “The Bandra-Kurla complex auction seems to have dampened the already dwindling investors’ interest in realty stocks,” said a real estate analyst with a brokerage.

“With the dip in real estate prices, the revenues of these builders will fall. Besides, speculative buyers have reduced their purchases in this sector. This seems to have reduced the sale price and volumes,” he said. People have postponed their buying decisions as of now and they seem to be waiting for the interest rates and liquidity scenarios to improve, said Mr Dilip.

Mr Sanjay Someshwar, a sub-broker with Ventura Securities, said that the real estate stocks have very high price earnings, which have led to selling in these scrips.

Only three realty stocks ended in the black on the bourses. There was some buying taking place in the counters of Peninsula Land (2.75 per cent), Phoenix Mills (1.47 per cent) and Sobha Developers (1.59 per cent).