REALTY SHAKEOUT POSSIBLE DUE TO LIQUIDITY

As valuations crumble, PEs, FIIs ready for big realty plunge Real estate funds, PE players and foreign institutional investors are exploring options to buy equity stakes in listed realty companies, as valuations of their companies have fallen by over 65% during the past three months. The move has also come as a blessing in disguise for these realty companies who have been finding it difficult to source funds after the RBI tightened lending norms to property developers following a global liquidity meltdown. Sources said funds floated by majors such as HDFC, ICICI, Kotak and Anad Jain’s Urban Infrastructure Opportunities Fund as well as foreign funds are in talks with listed real estate developers to pick up minority stakes.                                                                                

                                                                                                                  Courtesy: - ET Realty  dt. 25 July 2008        

The closing down of more than 20 textile mills and 15 manufacturing units in the country in the last 6-12 months has led to creation of a surplus supply of  real estate. With more than 20,000 workers in the textile sector now jobless, demand for space around industrial belts has slowed down, and more supply is taking prices further south.

The rentals are down by 20-25 % in the industrial belts. It is estimated that more than 15 lakh sq ft surplus area has been added in the market which is already depressed.

                                                                                                                  Courtesy: - ET Realty dt. 25 July 2008

In what would be the first major fund infusion into the Emaar MGF Group after a failed IPO, one of its promoters, Dubai-based Emaar is learnt to be investing $150 million (Rs 650 crore) to pick 20-25 %stake each in three real estate projects of Emaar MGF.

                                                                                                                  Courtesy: - ET Realty  dt. 25 July 2008