Realty Index and Markets Reaching Record Lows

Indian real estate sector is under pressure as as lending to developers is drying up, per recent PTI release. Banks are analyzing mortgage borrowers much more closely before lending. Conditions are at their worst ever level and project financing has dried up and Banks are waiting for pre-commitments of 30-40% of developments before approving finance. There are many other concerns e.g. requirement for promoters to disclose their equity stake pledges and the possible equity holder dilution which may come about due to strict bank lending policies to real estate developers.

BSE realty index is also plunging to all-time lows as gloom shadows the real estate sector despite RBI announcing measures like cutting cash reserve ratio (CRR), statutory liquidity ratio (SLR) and bench mark interest rates. Stocks of DLF, Unitech, etc. are have lost considerably in recent past but the effort seems to be too little to attract more customers by lowering price, bringing right product in the right market and offering completed products.