Economy

‘Crisil real estate ratings, a comment on quality'

Vinson Kurian Thiruvananthapuram | Updated on March 16, 2011

Crisil Real Estate Star Ratings are a comment on the quality of intra-city and project-specific real estate project under assessment, says Mr Lodd Rajendra, Head-Business Development, Crisil.

This is from a credit rating, which is an evaluation of a potential borrower's ability to repay debt, prepared by a credit bureau at the request of the lender.

BENCHMARKING FACILITY

The Crisil Real Estate Star Ratings are provided on an eight-point scale that helps benchmark a real estate project against peers in the same city. The evaluation of a project is based on site visit, peer-benchmarking, project compliance and interaction with management and project team. The ratings are widely disseminated through real estate websites, banks and institutions, customer awareness forums and real estate associations and through seminars.

The pricing aspect is kept out of the purview of the real estate rating process, Mr Rajendra told Business Line.

KEY FACTORS

The key factors evaluated in the State rating process are (i) quality of legal documentation (ii) construction-related risks (iii) financial flexibility/viability of the project and its background, and (iv) track-record of the project sponsor.

The rating exercise was evolved in the background for a strong need for an independent third-party evaluation of real estate projects in the country. Transparency and information availability in the sector has been at a low level. Most buyers face difficulty in accessing credible information to support their purchase decision.

TOOL FOR COMPARISON

There has also been a strong need to curb the volatile swings in the sector ranging from irrational exuberance to pessimistic withdrawal and replace it with a rational demand-supply price regime, Mr Rajendra said.

The Crisil Ratings provides them a tool affording them an opportunity to compare projects within a city.

Crisil has rated projects in Bangalore, Chennai, Coimbatore, Hyderabad, Kochi, Kolkata, Mumbai, Pune and Visakhapatnam.

Published on March 16, 2011

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