I would like to ask the developer friends here when they say there is an ambiguity as far as ECB is concerned. Which are the funding routes that you find without ambiguity—whether it is private equity, QIP, IPO or any other route to raise money?
Gaurav Gupta: I would say there are multiple challenges for the sector.
Track2Realty: India faces shortage of fresh supply of houses, the Technical Group on the Estimation of Housing Shortage projects the total shortage of dwelling units in urban areas in 2012 to be 18.78 million, said a report by Knight Frank Research.
Track2Realty Exclusive-Yearly Analysis: In a market where the five largest firms saw 75 per cent erosion in their combined market capitalization, burdened with debt and struggling with poor growth, there are few lessons these realty companies have been forced to learn the hard way.
Track2Realty Exclusive-Yearly Analysis: The first visible sign of creditors losing patience came in October 2012 when two private equity funds, Citi Property Investors and JPMorgan Chase, initiated separate arbitration proceedings against BPTP on the grounds that it has failed to provide a time-bound exit for their respective investments in the company.
Track2Realty Exclusive-Yearly Analysis: Indian real estate companies are reeling under the burden of debt, so much so that the excess cash that they had borrowed has become a liability that they want to get rid of but are unable to relieve themselves due to various factors beyond their control. They are nonetheless trying all possible measures, from selling land bank to restructuring their portfolio. Track2Realty tries to assess the seriousness of the situation where many of the realtors are caught between the distress sale and the debt trap.
Track2Realty: Amidst a global economic slowdown as a consequence of the US fiscal cliff and Eurozone debt crisis, India’s growth forecasts too have been revised downward over the last three quarters of the year.
Track2Realty: In the annual report by global real estate consultants Cushman & Wakefield, “Main Streets across the world”, Mumbai witnessed the highest rental growth globally. Colaba Causeway in Mumbai recorded a rental increase of 75% over last year, on the back of strong retailer demand and continuous preference for prime high street properties in the city. Kolkata – Park Street (5th) at 53.8% and Chennai – Khader Niwaz Khan Road (10th) at 36.7% were among the global top ten cities to register highest annual rental growth.
Track2Realty-Agencies: Ezzy Group, an infrastructure and property management company on Friday, Nov 9, announced its foray into the Indian realty market with an investment of Rs 5,000 crore spread over the next two years.
Track2Realty-Agencies: Two private equity funds, Citi Property Investors and JPMorgan Chase, have initiated separate arbitration proceedings against BPTP on the grounds that it has failed to provide a time-bound exit for their respective investments in the company.
Indian real estate companies, which borrowed heavily during the peak of the economic cycle and rosy business forecast, are now caught in the vortex of piling debt post-slowdown. Most of the realtors who went on a land bank acquisition with borrowed money are struggling to repay even the interest and banks look reluctant to restructure the debt any more.