Will they work?
This could well be a throwback to the heady 2006-2007 days when a slew of unlisted real estate companies flocked to the stock market to divest some stake to the public and raise money.What started as a trickle could well be a flood — as much as eight real estate companies have announced plans to issue an initial public offering (IPO). Will they work?
In a discussion on CNBC-TV18, Anuj Puri, Chairman and Country Head of Jones Lang LaSalle Meghraj, a real estate consultancy, said investors would be a little cautious in putting in money in realty IPOs this time round.
The 2008 stock market crash resulted in realty stocks taking a heavy beating — some stocks were, at their lows, 90% below their 2007 peaks.
"Investors will look at the developer’s track record, its past projects, capabilities to deliver in the future, corporate governance and most importantly, how much money the real estate companies are willing to leave on the table."
Puri had an interesting take on what the flurry of realty IPOs could do the property market:
"Due to the liquidity crisis of 2008, builders had to cut property prices and soTo read more, please, visit CNBC-TV18
prices could go up after the fund raising when the developers would not be under that much pressure.
On the other hand, all the money raised from IPOs could go into constructing property stocks,
which would easen the pressure on the demand-supply imbalance.
This could result in prices not increasing.
My guess is it is going to be the latter of the two."
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