Credit metrics of real estate firms continue to deteriorate on weak demand
Jan 22, 2014
Source : The Times of India


COIMBATORE: Credit metrics of real estate companies will continue to deteriorate in 2014-15 as high residential prices continue to impact sales, India Ratings and Research has said. The rising bank credit to the sector indicates an increase in inventory, it said.

India Ratings, which is part of the Fitch Group, has maintained a negative to stable outlook on the sector for 2014-15 on the back of continued weak end-user demand and adverse consumer sentiments. Real estate companies have been facing falling unit sales, flat revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) margins and continued deterioration in credit metrics and cash flows.

The sale of fresh residential units (in sq. ft.) by listed real estate companies has seen a downward trend in the first half of 2013-14. This was because of weak consumer sentiments and low real estate affordability due to high prices, India Ratings said. However, bank credit to the sector saw strong double-digit year-on-year growth in 2013, which indicates build-up of inventories, according to India Ratings.

Most real estate companies rated by the agency have a stable outlook as the risks impacting the sector have been factored into their ratings. "The entities rated at investment grade are either single commercial properties with long-term lease agreements or residential companies with healthy sales and strong cash flows," it said.

Prices continued to remain high despite the weak end-user demand as demand from investors and speculators could have been lifted by the Central Government's efforts to curtail gold imports, the agency said.

The upward movement seen in National Housing Bank's house price index in the second quarter of 2013-14 after a fall in the previous two quarters supported this argument, as it coincided with the imposition of import duty on gold, India Ratings said.

Demand for retail space is also likely to remain muted in 2014-15 as retail companies continue to optimize their store portfolios. The real estate sector has seen strong interest from private equity and foreign investors. During 2013, strong investor interest was seen in rent-yielding commercial properties with conclusion of several large transactions by leading private equity players such as Blackstone.




Latest Realty News

‘Construction bandh’in Kerala from today
Jan 21, 2014
KOCHI: The construction sector in Kerala will shut down for three days from Monday in response to a ‘construction bandh’ called by the Confederation of Construction Organisations, which consists of nearly two dozen associations such as those of architects, house painters, builders and quarry operators.
New Policy to Help Ports Get Optimum from Real Estate
Jan 21, 2014
KOCHI: The Union government has released new policy guidelines for major ports to help them leverage optimum commercial advantage from land resources.
Alind Property: State Govt Files Statutory Objection
Jan 21, 2014
THIRUVANANTHAPURAM: Finally, the State Government also seems to have woken up to block the designs of Somani Group, the current promoters of the Kundara-based Aluminium Industries Ltd(ALIND), to plunder the company’s assets and landed property worth thousands of crores of rupees.
Global realty brokerage chain RE/MAX enters Coimbatore
Dec 28, 2013
COIMBATORE: RE/MAX India, a division of RE/MAX International Property Group of the US, has entered Coimbatore with appointment of a Regional Franchisee Owner for the Rest of Tamil Nadu.
Hilton to open first property in Kerala
Dec 21, 2013
DELHI: Global hospitality major Hilton Worldwide is set to open the first Hilton Garden Inn property in Trivandrum by the end of the month. The hotel set to open on December 27, 2013 will be a 134-room property located on Punnen Road.
Joyalukkas Ventures into Real Estate Biz
Dec 20, 2013
KOCHI: Jewellery retailer Joyalukkas group ventures into the real estate sector with Joyalukkas Lifestyle Developers.
LMW joins hands with Sobha to launch project in Coimbatore
Dec 20, 2013
COIMBATORE:Textile machinery manufacturing major Lakshmi Machine Works has partnered with property developer Sobha to promote a housing development project, élan, at Ganapathy in Coimbatore. The project is coming up on a 4.76-acre plot owned by LMW.
Joyalukkas Group enters realty sector
Dec 18, 2013
KOCHI: Joyalukkas Group, the multi-billion-dollar global conglomerate, has entered the real estate sector by launching a residential project in Kochi.
Rakindo launches the next phase of Orchids in Coimbatore
Dec 14, 2013
COIMBATORE: Rakindo Developers, a joint venture between Rakeen, a company promoted by the Government of Ras-al-Khaimah and Trimex, an infrastructure company in India, is developing a residential project in Coimbatore, Orchids. The affordable gated community houses over 800 1, 2 and 3 BHK apartments, ranging from 672 sq. ft to 1,459 sq. ft.
Kerala revives move for regulating real estate sector
Dec 12, 2013
THIRUVANANTHAPURAM: The State Cabinet has revived the proposal for a comprehensive legislation to regulate real estate sector in the State.

Latest Realty News Of State

Realty Talk's