Real estate prices still high despite weak demand: India Ratings & Research
Jan 22, 2014
Source : The Economic Times


MUMBAI: India Ratings & Research has maintained a negative to stable outlook on the real estate 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 margins and continued deterioration in credit metrics and cash flows, the rating agency said.

Most of real estate companies rated 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.

The rating agency believes credit metrics will continue to deteriorate in FY15, as high residential prices continue to impact sales, even while rising bank credit to the sector indicates an increase in inventory for the sector.

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 is due to weak consumer sentiments and low real estate affordability due to high prices.

Prices continue to remain high despite the weak end-user demand, as demand from investors and speculators could have been lifted by the government's efforts to curtail gold imports. The upward movement seen in National Housing Bank's house price index in 2QFY14 after a fall in the previous two quarters supports this argument, as it coincides with the imposition of import duty on gold.

Ind-Ra expects subdued commercial property demand to continue in 2014, due to the continued slow economic growth which will impact fresh hiring in most sectors. Demand for retail space is also likely to remain muted in FY15, as retail companies continue to optimise 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.

Ind-Ra expects the introduction of real estate investment trusts (REITs) to be positive for the sector, as it is likely to attract new investors and hence improve funding availability. As these REITs are likely to invest most of their funds into rent-yielding commercial properties, this could provide further liquidity options to commercial property developers, it said.




Latest Realty News

Mumbai to get Rs 4,500 cr infrastructure boost
Jan 22, 2014
MUMBAI: A couple of infrastructure projects to be taken up in Mumbai, entailing an investment of Rs 4,500 crore, will improve connectivity and ease traffic in the city. These are in addition to the over Rs 55,000-crore worth of infrastructure projects in the works – metro rail, monorail and several elevated road corridors.
Capri Global to continue focusing on the residential real estate projects
Jan 22, 2014
MUMBAI: Capri Global Capital Ltd (CGCL), one of the country's leading non-deposits accepting, non-banking finance company, headquartered in Mumbai has entered into a deal with Monarch Universal Group to fund two residential developments in Roadpali, Kalamboli. Monarch Universal Group is a well-known developer with a track record of delivering residential and commercial projects primarily in Navi Mumbai area.
540 homes sold during Maharashtra property exhibition
Jan 22, 2014
THANE: Over 92,000 people visited the 13th property exhibition organized by the Thane unit of Maharashtra Chamber of Housing Industry ( MCHI) - Confederation of Real Estate Developers Association of India ( Credai).
Unitech joint venture ropes in PVR, KidZania for Noida Entertainment Project
Jan 22, 2014
MUMBAI: Developers of Entertainment City, Noida, have roped in PVR to set up the country's largest superplex with 15 screens and Mexican chain of family entertainment centres KidZania to open an indoor theme park.
Real estate prices still high despite weak demand: Ind-Ra
Jan 22, 2014
MUMBAI: India Ratings & Research has maintained a negative to stable outlook on the real estate sector for 2014-15 on the back of continued weak end-user demand and adverse consumer sentiments.
IndoSpace raises $330 mn for industrial projects
Jan 22, 2014
MUMBAI: Industrial real estate and warehousing facilities developer, IndoSpace, today said it has raised $330 million for projects across the country from a diversified investor base.
Civic staff will be held accountable for unassessed properties
Jan 21, 2014
PUNE: After the success of its drive to recover dues from defaulters of property tax, the Pune Municipal Corporation (PMC) has decided to make the ground level civic staff accountable for failing to identify properties that have not been assessed for tax.
Nariman Point RR rates beat market
Jan 21, 2014
MUMBAI: The new stamp duty ready reckoner rates for Nariman Point have been fixed at Rs 43,000 a sq ft when the prevailing market rate ranges between Rs 26,000 and Rs 30,000 a sq ft.
Real estate (office) urged to contribute to new international standard
Jan 21, 2014
MUMBAI: The International Property Measurement Standards Coalition (IPMSC) has launched a public consultation on theInternational Property Measurement Standard (IPMS) for office buildings.
Innovations, technological developments in construction
Jan 21, 2014
MUMBAI: During the past decade, the construction industry has adopted various innovative tools to curb costs, reduce timelines and improve safety standards during project development.

Latest Realty News Of State

Realty Talk's