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Indian Real Estate News
At a glance: Economy & realty in February 2012
Source: Source: Mar 01, 2012
The Indian economy finally seems to be cooling off in terms of prices with the latest month's inflation being reported at the lowest level since the last two years. Wholesale Price Index (WPI) growth for the month of January 2012 stands at 6.6%, down from 7.5% in the previous month. Additionally, WPI growth of food articles was reported at -0.5% for the latest month implying that food prices have finally started falling. These numbers bring a great amount of relief to the Reserve Bank of India (RBI) which has been trying to contain inflation since 2010. However, the latest GDP growth number of 6.1% for Q3 2011-12 indicate that the impact of tighter monetary policy has started creeping into the economic growth of the country. With prices under control and GDP growth slowing down, the RBI is expected to ease its monetary policy stance by reducing the policy rates in the coming months. The Cash Reserve Ratios (CRR) cut of 50 basis points from 6% to 5.5% in January 2012 is a clear indication of this.

The impact of monetary policy's easing will be most positively felt on the cash strapped sector of real estate which has been suffering in terms of liquidity since the past few quarters. The financial performance of the real estate companies in the latest quarter is a testimony to the deteriorating condition of the sector. In order to analyze the performance in detail, we have considered the financial results of 22 listed real estate companies in India on a quarterly basis. These 22 companies can be considered as a fair representative of the overall real estate market of India since they not only cover the various sub-segments of real estate but also all the major cities of India.

Following are the key takeaways of the report:

1.    The Realty Index on BSE has dropped by more than 36% in the last one year compared to a 15% fall in the Sensex.

2.    While price of steel and bricks have gone up by more than 20% since January 2010, labour cost has increased by close to 16% during the same period.
3.    Revenues for December 2011 quarter fell by 13% to INR 57 bn as compared to INR 65 BN reported during December 2010.

4.    Performance of realty companies in terms of profit has been worsening with each passing quarter. During the December 2011 quarter, the year-on-year growth in profit has been -45% despite revenues falling by only 13%.

5.    The Report also incorporates a study on the Bangalore Real Estate Market.

Tag: Real estate in india, property in india, indian properties
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