According to Mr. Suman Memami, Research Analyst of Religare Securities, the realty market is expected to face further pressure in the short term on account of the following:
Slackening demand in both the residential and commercial segments.
Downward trend in realisations across markets.
Deepening discounts offered by builders despite which builder rates are at a significant premium to investor flat rates.
Liquidity crunch which is causing builder to postpone new launches. Further, the cost of under-construction property is rising as commodity prices head north.
Pile-up of inventory with builders or developers.
EMIs are getting dearer as interest rates move up. Banks are offering home loans for 75-80% of the property value as compared to 85-90% previously.
PE players are also in a wait & watch mode.
NAV of realty stocks will shrink because of the slowdown in execution, fall in realisations and rising costs.
Moreover, uncertainty in the Indian stock market is further driving stocks to all-time lows. The beta of realty stocks is higher and hence they tend to lose more than market indices and vice versa.
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