With the US and European debt crisis affecting sentiments across the world, the Indian real estate sector is likely to see a gloomy phase ahead and property developers would face liquidity crunch, low sales and pressure on margins, as per Jones Lang LaSalle.
It has pointed out that the projects would be delayed, unsold housing stock will rise and developers might have to offer new projects at discount, all because of a slowdown in property demand. The US and European debt worries have added to the uncertainty. With the escalating global liquidity issues and social unrest, these are challenging times. We definitely expect these sentiments to reflect in the financial profile of the Indian real estate sector. Banks would further tighten lending to realty sector and disbursal rate of home loans is bound to reduce.

Developers will be under pressure to reduce their debt-to-equity ratios. Fund raising through the QIP route will reduce, and we are going to see a decrease in real estate IPOs. In order to generate funds, many developers will sell their non-core land and divest their stakes in non-core businesses such as hospitality and retail.