No bubble like situation in real estate sector - Assocham

Profitability of realty majors declined by 56 per cent in the first half of 2009-10, which contradicts concerns over formation of a housing bubble in the country, industry body Assocham said today.

"Financial performance of realty majors during the first half of current fiscal shows grim picture of the sector with a decline of 56 per cent in net profit, dampened by 51 per cent rise in financial charges and interest cost," Assocham said.

The total income of realty majors declined by average 40 per cent in line with the fall in net profit whereas the total expenses of sector registered an average decline of 35 per cent despite an increase of 51 per cent in interest cost.

To prevent any formation of asset bubble, RBI in the quarterly monetary review last month asked banks to keep more money aside while giving loans to commercial real estate.
pti

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