For all the talk about a slowdown in the economy, real estate prices in
most parts of the country have not corrected as much as most
prospective buyers would have liked them to. But, shares of most real
estate companies are not finding any takers even after falling nearly
50% from their record highs in January this year. This would suggest
that the ongoing sell-off in real estate stocks is a good opportunity
for bargain hunting. Yet, most brokerage houses are advising their
clients against doing so, as they foresee testing times for the sector
in the near term. In fact, many of them are recommending that existing
investors cut their losses right away as they could be in for a long
wait for share prices to come anywhere near their lofty highs.T he
sharp rise in real estate prices, coupled with high borrowing costs has
let to softening of demand. The slump in the stock market, too, has
contributed to the trend as many investors were earlier routing their
gains in share trading into real estate.Industry experts feel that
companies that have managed to buy land in Mumbai
at reasonable rates could be good bets even in these turbulent times.
With outlook on the market as a whole being bearish, brokers expect
realty stocks to slip further.Most property developers in India were
riding the wave of an unprecedented demand due to a combination of
rising affluence, tax benefits for home owners and low interest rates.
But, this fuelled speculative buying in the sector, causing property
prices to soar to exorbitant levels.
