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The Real State of Real Estate !

Amar Ambani ,  India Infoline News Service | Mumbai | October 05, 2009 20:53 IST

This sector update on real estate is an outcome of our painstaking probe and comprehensive interaction with key stakeholders of the residential real estate market which reveal startling facts and figures on the value distribution of this sector across the key metros.

With decent shelter and space commanding a handsome premium across the country, the Indian real estate enjoys a unique place of pride and prominence among investors. Over the years, this sector has witnessed a sea change in volumes and value. From a pure stock market perspective, the figures are nothing short of spectacular Listed real estate companies have seen a 30-fold increase in market capitalization - from a meager US$ 110 million in 2004 to US$ 30 billion till date.

 

Despite the meteoric rise and media attention, the sector remains fragmented and hence elusive for investment. Prima facie, every single real estate transaction requires statutory registration but this regulation is of little help when it comes to the availability of primary data. Further, the transactions are invariably highly cash-centric thereby posing problems in making fair value estimations.

 

Our painstaking probe and comprehensive interaction with key stakeholders of the residential real estate market - developers, mortgage financers, property brokers and statutory authorities - reveal startling facts and figures on the value distribution of this sector across the key metros of Mumbai, NCR, Chennai, Pune, Bangalore, Hyderabad, Kochi and Kolkata.

In a nutshell

While Demand dropped by 28 per cent...from the 2006-07 peak of 2, 38,000 annual primary transactions to 1, 73,000


Value declined 38 per cent...from US$ 26 billion in 2007 to US$ 16.1 billion

Because  Unit prices fell 16 per cent...fall in demand  reduced average apartment ownership cost from Rs 5.2 million to Rs 4.4 million (reduced apartment size and per sq ft price)

  • Mumbai and NCR dominate the residential market (holding 57 per cent of the total value) price recovery sharpest in Mumbai and NCR. Developers with large exposures to both, to reap maximum revenue and profits.
  • Pune and Chennai were most resilient in the face of the current slowdown, thanks to their predominately end-user markets and high affordability for investors.
  • Mumbai and Delhi most affluent among all metros.

Fall meter









 
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Fall in per cent from peak Key trigger
Bangalore 38% Economic uncertainty led by IT job losses
NCR 36 % Investor exodus  following the 2008 price slump (Commanded 40 per cent of total demand)
Company Price % Gain
Kotak Mah. Bank 1206 3.67
St Bk of India 299.9 2.83
Hindalco Inds. 156.5 2.76
B H E L 244.5 2.62
Punjab Natl.Bank 960 2.6