How will the impending year to the Indian realty sector be? This question, truly speaking, is perturbing the entire pertinent industry and till now we are getting mixed responses from the captains. This is also quite natural, especially after the debacles in the very last year. The $14 billion Indian realty industry faced a major catastrophe both for the sharp fall in demand and also high cost of credit in executing ongoing projects.
Nevertheless, some chieftains of the industry seem to be optimistic and they are having the idea that there shall not be any disaster in the coming months. So can we be hopeful in the same way? We should take a look at our horrific experiences in the recent past. A considerable section of these realtors (quite content with hiking the cost of both residential and commercial project three-four fold in the past years) were forced to start on low-cost ventures and lessen prices.
Big players like DLF and Unitech also became unable to save own skins and kith and kin from this humongous mischance and had to mop up funds through competent institutional placements to feed their cash-starved enterprises - most of it to retreat old debts and fund new projects.
Take a look at the data compiled by foremost brokerage and research firm SMC Capital. As indicated by it, some Rs 10,300 crore (more than $2 billion) was mobilized by realty firms such as DLF, Unitech and Indiabulls in the first half of 2009 through private placements. It has also been found that companies (no less than 15) like Emaar MGF, Lodha Developers and Sahara Prime City are set to furnish initial public offerings to raise about Rs 15,000 crore ($1.8 billion) to tide over their funds crisis.
Among them, Delhi-based Emaar MGF Land alone proposes to raise Rs 3,850 crore ($770 million), while Sahara is targeting Rs 3,450 crore ($690 million). Lodha Developers have targeted Rs 3,000 crore ($600 million) and Godrej Properties want to raise Rs 600 crore ($12 million).
What conclusion can be drawn then? We have to be hopeful but a success depends on a few factors, instead of a single one – we must not forget this.
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