• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• Smartbuy

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

Mumbai, Aug. 22 It is the aspirations of the new generation builders that has led to the state of oversupply in the country’s real estate sector currently, said speakers at a seminar on changing trends in the Indo-US real estate sector.

“There are around 15-18 new generation developers in the country today, most of whom haven’t seen a recession in their time. They aspire to become bigger than the market, and are committing to acquire more than what is really needed,” said Mr Sanjay Dutt, Joint Managing Director, Cushman & Wakefield. Too much has happened at a very fast pace in the last one year in this sector, he added.

Mr Dutt said that the retail investors who have overcommitted are currently not very confident about investing in the sector.

The market capitalisation of the real estate sector at its peak last year was close to $90 billion and now it has dipped to between $30 billion and $35 billion, said Mr Nipun Sahni, Head Global Commercial Real Estate, DSP Merrill Lynch. According to Mr Sahni, out of the $22 billion raised through the initial public offerings (IPO) last year, 42 per cent was by real estate firms.

“Now almost everyone who had invested in real estate has lost money. The BSE Realty index itself has lost more than 60 per cent from its peak. Realty stocks are trading at discounts to their IPO prices,” said Mr Sahni.

Mr Jai Mavani, National Director, KPMG, said that investors in real estate IPOs had taken into account the land banks available with the promoter-developers and not the ability of the developers to get their projects off the ground and sell them.

Mr Niranjan Hiranandani, Managing Director at Hiranandani Group, was of the opinion that the sector is over-regulated. “Look at what deregulation of the banking, IT, airlines and telecom industries has done.” said Mr Hiranandani.

“The year 2007 was a very good year for the real estate sector; there were a slew of large IPOs; FDI investments have increased year-on-year and there was just a whole lot of capital flowing into this sector. Even now, the dynamics are quite interesting with the GDP rate being one of the best in the world, mortgage penetration remaining quite low and also the housing shortage,” said Mr Pritam Chivukula, National Director, Colliers International (India).

More Stories on : IPOs | Real Estate & Construction | Stock Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2008, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line