As more and more residential properties remain unsold, companies and PE players may have to rethink strategy.
Rahul Patil, 36, a marketing executive with a big media group in Mumbai, changed his mind about buying a house at Mira Road – on the city’s outskirts – at the last minute. The reason was two-fold: first, a general apprehension of forthcoming retrenchments across corporate India – if it happened to Patil, he would find it impossible to repay his housing loan. But more importantly, he knew he would lose nothing by delaying. “I don’t know if real estate prices will fall in the near future, but they sure won’t rise any time soon,” he says.
It is a sentiment widely held in the residential real estate market. “Between 2009 and 2013, real estate prices were escalating every month and the developer was king,” says Sharad Mittal, Director and Head, Motilal Oswal Real Estate Fund. “Property prices became unaffordable for most people. Prices remain the same today, and it is my sense that in micro markets like Lower Parel in Mumbai, they will stay the same for the next three to four years. This has led to serious trust deficit and affordability issues for the industry.”
Most important is the problem of cash flow. “The slow pace of sales over the last 24 months is causing cash flow mismatches for developers,” says Vikas Chimakurthy, Senior Executive Director, Kotak Realty Fund. Caught in a pincer are private equity (PE) players who have invested in residential real estate. With inventories remaining piled up, they are forced to stay invested – exits, with decent returns, are extremely difficult. Chimakurthy believes that more than half the estimated $3 billion PE debt investment in residential real estate is unable to get refinanced. “These non-refinanced developers have to either bring in more equity and reduce some portion of their debt, or reduce prices of properties to increase the pace of sales to service existing debt obligations,” he adds.
この記事は Business Today の May 07, 2017 版に掲載されています。
7 日間の Magzter GOLD 無料トライアルを開始して、何千もの厳選されたプレミアム ストーリー、8,500 以上の雑誌や新聞にアクセスしてください。
すでに購読者です ? サインイン
この記事は Business Today の May 07, 2017 版に掲載されています。
7 日間の Magzter GOLD 無料トライアルを開始して、何千もの厳選されたプレミアム ストーリー、8,500 以上の雑誌や新聞にアクセスしてください。
すでに購読者です? サインイン
The Dark Side Of Gold Loans
There Has Been A Sharp Rise In Gold Loans In Recent Years. But There Is A Seedier Side To This, As Is Evident From The Red Flag The RBI Raised Recently. Will The Regulator's Move Protect Customers?
All That Glitters
The price of gold has been rising unabated. It has soared to more than 73,000 per 10 gm in 2024 from *31,000 in early 2018. Is the rally sustainable or is this a bubble?
"Hire for attitude, not ability"
Thryve Digital is a player in the healthcare technology sector delivering next-generation solutions
Road Warrior
For Khalid Wani, Senior Director of Sales at Western Digital India, life is much more than just the corner office. Biking across the world is one way he derives meaning for his life
WIDENING THE POOL
THERE HAS BEEN A JUMP IN INDIVIDUALS INVESTING DIRECTLY IN THE STOCK MARKETS, BUT MUMBAI AND AHMEDABAD STILL ACCOUNT FOR THE LION'S SHARE. THERE DEFINITELY IS SCOPE FOR IMPROVEMENT IN TERMS OF PENETRATION LEVELS ACROSS THE COUNTRY
CRISIS IN THE CLOUDS
INDIAN AVIATION IS IN CRISIS. AIRLINES ARE GRAPPLING WITH FLIGHT CANCELLATIONS, CREW SHORTAGES, AND COMPLAINTS ABOUT POOR SERVICE, ARE BLEEDING DUE TO RISING COSTS WILL THE FASTEST-GROWING AVIATION MARKET RECOVER?
"India should start privatising public sector banks"
Arvind Panagariya, Chairman of the 16th Finance Commission, on growth, inequality, jobs, the banking sector, and more
"I LET MY WORK DO THE TALKING"
Megha Engineering & Infrastructures MD P.V. Krishna Reddy on being low profile, the infra opportunity and much more
"Core of insurance lies in long-term security"
Vibha Padalkar, MD & CEO of HDFC Life, on the insurance provider's performance, surrender charges, and future innovations
Distress in the Books
Bandhan Bank, the brainchild of Chandra Shekhar Ghosh, has made the journey from an MFI to a bank, but with many hurdles. Now with his resignation as MD & CEO, is the lender staring at more uncertainty?