Investors have pumped in USD 25 billion into the Indian real estate market over the last three years but with land values having gone down they could have lost a third of the value of their investment, HDFC chairman Deepak Parekh said in a letter to shareholders.
Parekh said investors
have invested over USD 25 billion in Indian real estate through IPOs, QIPs (qualified institutional placements), AIM listing (alternate investment market) and foreign direct investment . A large part of these funds were used for buying land at exorbitant prices.
"With land values having come down, my estimate is that investors could have lost a third of the value of their investment," he said.
Advocating caution, Parekh said investors in real estate have to be more discerning. They should be more realistic on valuation expectations and not throw caution to the wind, he said.
He also criticised the recent trend where housing loans are offered at attractive interest rates in initial years.
"We are seeing some variations of teaser type housing loans being offered. The lure of low interest rate at the start of taking a housing loan is enticing. But are customers being made aware of future implications," he asked.