News & Views on Indian Real Estate

Monday, May 05, 2008

Realty stocks witness a correction

India’s real estate stocks that once paralleled the boom in property values may start to see more softening, in line with the tepid market. After the stock market crash, real estate stocks have been trading at a discount of 15-50% to their net asset values (NAVs), or the value of their assets less liabilities. And the recent drop in their values will likely stay until property developers start executing and selling more projects, say industry experts. Analysts say property stocks are overvalued and a correction in stock prices is bound to happen. Developers have taken on more projects than they can execute and valuations will not improve until we see projects actually being executed. Due to which the property stocks will be halved in value. Analysts also believe the correction in property stocks will be accompanied by a correction in real estate prices across the country. Developers in India were riding a high after an unprecedented economic boom and tax benefits for home buyers made it attractive for thousands of Indians to own homes. The resultant demand and boom also resulted in speculative buying, or flipping —holding properties for a short while to cash out on gains. Developers need money and if they can’t sell projects at the current high price levels they will have to bring down prices. However, not everyone thinks real estate valuations will come down. Many feel that real estate stocks have fallen but this has got to do more with the meltdown in the global markets. I think real estate stocks will recover when the market conditions improve.

apoorv said...

mind blowing ,,,since i am an in stocks analysis the figures are are to the point specialaly thae net values ,really good
who ever has written this article its raelly realyy good

apoorv said...

aacc to the global raal estate the indian market will boom for atleast the decade ,,, so their is a lot of land rush

Manish said...

Thanks for giving such a nice information can u give some more details on this topic.

Anonymous said...

Is that news is correct or not?
I think that is not possible what is the linkage between stock market and Real estate market both are different ?

Anonymous said...

I really like your blog it’s excellent…

Plz share more about India real estate growth in this ression