Realty sector frets over IPOs, price rise
Price hikes and a drive to launch initial public offers (IPOs) by some builders have caused a flutter in the real estate industry, in which some feel undue optimism or big talk of a bounceback could hurt an incipient recovery.india Updated: Sep 13, 2009 21:02 IST
Price hikes and a drive to launch initial public offers (IPOs) by some builders have caused a flutter in the real estate industry, in which some feel undue optimism or big talk of a bounceback could hurt an incipient recovery.
“The real estate sector is now in a fragile mode and any price rise would dampen demand,” said Anuj Puri, chairman, Jones Lang LaSalle Meghraj (JLLM).
“There are reports of some developers increasing prices by 10 to 12 per cent to cash in on this slight reversal and this could prove counter productive. Buyers will stay away,” Puri said.
Niranjan Hiranandani of Hiranandani Constructions said 8,000 flats have been booked in Mumbai in the past three months due to a price correction.
“We are still in the process of recovery and any further price rise at this moment would backfire,” he said.
Planned IPOs also worry some.
“We are still walking on very thin ice. There has been no fundamental change to talk about optimism. Fifteen realty companies are coming up with IPOs to grab $6 billion (Rs 29,000 crore) but the market does not have so much appetite.
Everybody is trying to seize the opportunity,” Puri said.
Godrej Propetries, Nitesh Estates, Emmar MGF, Oberoi Constructions and Lodha Developers are among those eyeing IPOs.
Some feel the sudden rush to use public money to retire debt could erode investor confidence.
“We are zero debt company. We will not utilise the proceeds to repay loans,” said Vikas Oberoi, managing director, Oberoi Constructions.