Beware of Real Estate…the Reality is Worrying

Delay that purchase of Real Estate by a few months…Developers and Builders are on the edge…final straw would be lack lustre Festival Sales in October and November this year…post Diwali you will see a significant drop in Real Estate Prices across towns and cities…you’re already getting resales at 30% lower than Developer’s price in the same properties in areas like Gurgaon and Noida off Delhi……Pranay Vakil,Chairman of Knight Frank India,a leading Real Estate Broker and Advisor has warned that this is just the tip of the iceberg and a deeper correction is in the waiting

Rising Interest rates,Shrinking Pool of Buyers and increasing supply of Real Estate are the realities today and the Impact willplay out over the coming quarters

Early signs of Panic are clearly visible

If you’re invested in listed Real Estate companies and are convinced that this is only a temporary phase then atleast ensure that the Real Estate companies you hold dont carry much debt in their books and are well capitalised…also they are developing in select prime areas that has not seen much of a price decline….Bombay Dyeing for example…maybe even Orbit Corp too…Both are Mumbai centric….dont fall for the Land bank v/s Market Cap Valuation basis ….most of the Land Bank is not even in the name of the companies….many joint venture plans are falling through…land prices are declining and time and cost delays on project are routinely expected now……If you want exposure to Real Estate then it is advisable to stay with the Big Guns,DLF and Unitech