Though property prices have not gone down in spite of sluggish sales numbers, property stocks have. The market capitalisation of realty stock has eroded by Rs 35,305 crore in the last 18 months. The full market capitalisation of BSE Realty index declined to Rs 75,128 crore on Thursday from Rs 1.10 lakh crore on December 31, 2010.

The CNX realty index consisting of 10 stocks has declined 39 per cent in the last one year and barring Godrej Properties, all others have seen a price correction from 17 per cent being the lowest (Oberoi Realty) to 85 per cent being the highest (Orbit Corporation).

“The realty sector today is last in anyone's list to invest as it is not the best of time for them,” said Mr Prakash Diwan, Head — Institutional Equities, Networth Stock Broking.

Tough times ahead

“Those who also have some business interest in infrastructure might bounce back but pure realty players will see tough times ahead.”

Experts said real estate players had managed to rope in investors into their projects who were cash rich and are hence able to hold on to property prices better this time.

With this business not following free market dynamics, inventory usually changes hands from one developer to another and only extreme market conditions would prompt a distress sale they said.

Experts also observed that metros like would see a 25 per cent correction in prices going forward. “It is just a matter of time before prices correct,” said Mr Arun Kejriwal, Founder, KRIS Research.

“The earlier tactic of keeping list prices intact and giving discounts in kind such air-conditioning, modular kitchens as a pass back is not sustainable as investors would start asking hard questions on the decreasing sales volumes next quarter onwards.”

In sum, there is unanimity on the street that realty companies would find it very difficult to raise money from the equity markets in the future.

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