Saturday, December 6, 2008

Real estate developers are left with no choice but to defer their project launches for the next two quarters

Find buyers and make sales:

With credit repayment dates nearing and banks refusing to refinance their loans, real estate developers are left with no choice but to defer their project launches for the next two quarters.

Pankaj Renjhen, managing director (Mumbai) at international real estate consultant Jones Lang La Salle Meghraj, said the industry is stagnant at the moment. “There will be no new launches till the first quarter of the next fiscal. Right now, developers’ immediate goal is to find buyers and make sales,” he said.

Private equity:

Private equity (PE) players too are playing safe, refusing to enter the market for the next six months, Renjhen said. He added that about $2.5-3 billion PE investment that was expected to enter the market has now been postponed. So developers are forced to complete their under-construction projects rather than announce new ones.

Debts and repayments:

A Mumbai-based analyst with a foreign brokerage, on condition of anonymity, said, “Most of the developers whose debts have doubled will execute existing projects and try to cash them to repay loans. Those who aren’t under the stress of loan repayments won’t touch any new projects.”

Another analyst with domestic brokerage added, “Any mid-cap developer who has leveraged its equity to debt ratio by 1 is facing problems raising capital. It’s better they enter when money is available at low interest rates. To read more, please, visit: DNA

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