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.

The Indian real estate sector is set to get a breather from the market regulator SEBI's move to allow Real Estate Mutual Funds. Real Estate Mutual Fund Scheme means a scheme of a mutual fund which has investment objective to invest directly or indirectly in real estate property and shall be governed by the provisions and guidelines under SEBI (Mutual Funds) regulations. The SEBI added that the schemes will have to be close-ended with its units listed on a recognised stock exchange wherein the net asset value (NAV) will be declared daily. Real Estate Mutual Funds (REMFs) have a useful purpose and a role which until recently was missing in the real estate ecosystem. REMFs should help ease the situation and compensate to some degree the relative absence of public equity and challenging debt markets..At present, not much equity funding is available to projects below 50 thousand square metres of built up area or 25 acres and there is hardly any domestic secondary market for stabilised income yielding assets.Mr. Mayani added, “Besides, with foreign money not permissible in fully built up commercial, residential and retail assets, this is a good vacant space for REMFs.REMFs would buy fully built assets and it should help unlock capital for developers. Also, with 15% allocations, which REMFs would have towards under-construction assets, some additional equity should also be available for non-FDI compliant projects. Introduction of REMFs is certainly timely and well intended REMFs would help in creation of an alternative investment portfolio for small investors or households who do not have the technical ability and the means to directly invest in the sector, catalysing a sophisticated and liquid market for mortgage backed securities and mobilisation of retail funds for assets through a regulated institutional route.

Kolkata’s realty market is growing. The real estate market of Kolkata is comparable to tier-II cities like Hyderabad, Chennai and Pune and is even ahead of these in terms of pricing of some of the recent deals. The IT realty market is hotting up too. Estimates suggest that about 120 lakh sq.ft. of new plug-and-play IT infrastructure will come up in Kolkata in the near future.TCG Real Estate, a part of The Chatterjee Group promoted by Purnendu Chatterjee, is planning to take up an IT park project at Sector V, near the Salt Lake area, with an investment of around Rs 250 crore. The entire project, would be spread over 11 lakh square feet and split in two phases, and is slated to be completed by 2012. TCG was also exploring the possibility of executing similar projects in places like Siliguri and Rajarhat. The project, to be launched in the latter half of the year, would be funded through internal accruals. In the first phase of the project, around 6 lakh square feet area would be developed, with ground floor dedicated to retail space. TCG Real Estate, which has a presence in about eight cities across India, has a tie-up with the US$ 25 billion US-based Vornado Realty Trust for partnering its large format projects like special economic zones (SEZs). Biotech Park park in Pune, World Trade Centre in Delhi and Bengal Intelligent Park in Sector V, near Kolkata, are some of the major projects of TCG. The company has a landbank with capacity to develop US$11.1 million sq feet of projects.

Real estate in Mumbai has been on an upswing in the last three to four years, and continues to display tremendous potential. A multitude of factors including increasing urbanisation, rising disposable income, easy availability of finance and favourable tax regime have backed the development of real estate in the city. With the demand for housing in Mumbai high and shortage of land to meet the rising demand, the city’s western suburb Bandra could see availability of close to 60 acres of real estate for development. The residents of the Maharashtra government’s employee staff quarters have suggested that government redevelop the colony spread across 96 acres. The relocating of existing staff in the multi-storey buildings will require 25-30 acres of land while the government can exploit the rest for further development. The project will also fetch additional revenue to the government that is spending Rs 15-20 crore on annual maintenance. If the approval for the project is granted it would result in a significant supply of real estate in Bandra, which would inturn attract corporate houses to set up new offices .According to the industry experts, the real estate rates at Bandra-Kurla Complex have jumped 100 per cent in the last three years. The additional of piece of land will have huge impact of the area’s realty considering the strategic position of the colony. The specific assessment is not possible as the project will take time to come up if approved. The staff has already paid the cost of the houses through the HRA deductions and it is impossible to buy new houses at such high realty prices. With such developments taking place there is no chance for the real estate growth in Mumbai to come down.

For the past few years, mostly since the IT boom and lot of NRI's pumping money into real estate in India, prices, especially in the major cities, have skyrocketed. Madurai is the second largest city of Tamil Nadu, in South India. Madurai is famous for Meenakshi Amman Temple. Apart from this; it is well connected by air, rail and road to all major cities. Madurai is selected for starting many IT and ITES company. Domestic flights connect the city to state capital Chennai, Bangalore and Hyderabad. International connectivity from Madurai airport, located 13 km from the city centre, is also expected to begin this year. In fact, according to a Cushman & Wakefield (C&W) report, real estate development is increasingly moving to the southern and western parts of the city, mainly around the airport, Rirupparankundram Road and By-pass road. This is due to a scarcity of land in the CBD (Chinnakadai). The city has witnessed encouraging commercial development over the last three-four years. The state government has transferred two land patches — 29 acres at Ilandhaikulam and 213 acres at Vadapalanji — to ELCOT for SEZ development. Sify, HCL, TCS, Wipro and CTS have booked their space for campus developments in the SEZ. Upcoming developments in Madurai include three IT/ ITeS/ SEZs, covering a total area of approximately 128 hectares.This apart, the Tamil Nadu Housing Board proposes to set up several office and commercial complexes in five prominent places in Chennai and Madurai to meet the demand for commercial space, according to a recent state policy note. The residential space in Madurai, like all other small towns, is largely skewed towards independent homes culture. However, the apartment culture has picked up due to an increasingly investor population that’s now driving the demand for residential apartments and villas. This has attracted many national and international developers. New supply is largely concentrated towards south/south-east Madurai.Madurai is soon gonna become one of the hot spots for investing in real estate.