Value of Real Estate Property

The term real estate covers built-up housing, profitable offices and trading spaces such as theaters, hotels and restaurants, retail outlets, industrial buildings such as factories and government buildings. Real estate involves purchase sale and development of land, residential and non-residential buildings. The behavior of real estate sector embraces the housing and structure sector also.

In real estate sector major constituent comprises of housing which accounts for 80% and is growing at the rate of 34%. Remainder consists of commercial segments office, shopping malls, hotels and hospitals. The two most active segments are high net worth individuals and financial institutions. Both these segments are particularly active in commercial real estate.

Financial institutions like HDFC and ICICI show high preference for commercial investment, the high net worth individuals show interest in investing in residential as well as commercial properties In NRC present situation of global hold up, where stock markets are plunging, interest rates and prices are mounting; the result of this can now also be felt on Indian real estate sector.

Overall slowdown in demand can be witnessed all across India which is causing trouble for the major industry players. Correcting property prices and rentals are eroding away the market capitalization of many listed companies like dlf and unhitch. Other factors which have contributed to this slowdown are raising interest rates leading to higher costs. Due to this almost all the developers are facing serious liquidity crunch and facing difficulties in completing their ongoing projects. Situation seems to be so disastrous that most of the companies have reported 50-70% cash shortfall.

The grades developers which are facing cash crunch include dlf, mgf, Emmer, developers, and TDI Group. As a outcome of this liquidity crunch many developers have started slowing down or even stopped construction of projects which are either in their initial stages of development or which would not affect their bottom line in near future.

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