Realty stocks in red zone despite sector's revival

By SiliconIndia   |   Wednesday, February 24, 2010   |    5 Comments
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Bangalore: Even though real estate sector is showing some revival, realty stocks have lost about 10.5 percent since the start of this month, and also emerged as the top loser last week with a loss of 5.7 percent. The sector traded in the range of 3390.16 3189.77 points. As on February 23, 2010, the market capitalization of realty stocks is of Rs.104,355.53 crore. Among the losers Realty sector was followed by Oil and Gas sector, which lost 1.6 percent, and in gainers' list Health Care and Bankex were the top gainers for the week, up by 1.9 percent and 1.6 percent, respectively. Experts believe that while a revival in the real estate rates is being observed in most major cities, structural issues, which are not so apparent at first look, are creeping in and affecting stock performance. In some of the cities, the demand is yet to pick up. A report on real estate by local broking house Ambit Capital pointed out that in Bangalore, residential sale prices have increased by approximately 10-20 percent from the mid-2009 trough, but the current sales volumes are extremely weak, about 90 percent below the peak sales level. Foreign broking major JP Morgan believes that policy risks for the sector are on the rise and investors could expect banks to tighten their developer financing. "But a big (1-percentage point) rise in mortgage rates is not expected," a recent report by JP Morgan noted.
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Reader's comments(5)
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Posted by:acai weightloss pills - 07 Dec, 2010
2: This sector is still (even recovery has happened) under burden due to lack of buyers. Realtors should focus on volume & build more homes instead of contemplating too much profit margin from a typical project. Realtors always blame govt. for not providing tax benefit this & that. But the truth is they are already earning tons of money from this business. What I mean to say is if they cool down prices by 20 to 30% & launch some more projects they will be earning more than what they are earning now. More buyers will turn to them.
Posted by:abhijit - 25 Feb, 2010
3:
Dot
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4:
Dot
Correct. The developers should focus on project completion rather than price speculation. Unfortunately, the developers are not able to come out of the greed and this is affecting the overall health of the industry. Having a 70% profit margin is not sustainable in the long term.

The developers also need to provide discount to the previous buyers and align the higher old rates to new one. Alternatively, they should refund the money taken with modest interest.

Its good time that the real state regulator comes in force. There are so many buyers who have paid a good percentage as the advance and are left high and dry by the real state companies with the projects abandoned.
Nish Replied to: abhijit - 01 Mar, 2010
5:
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