Mumbai, Sep 10 (UNI) Stating that the current downturn in real estate is a market correction and the pain will continue for some more time, Housing Development Finance Corporation (HDFC) Chairman Deepak Parekh today lamented the lack of regulator for the sector.
Inaugurtating the fifth FICCI-International Real Estate Summit-2008 here today, he however said that thanks to the timely intervention by the Reserve Bank of India (RBI) the sector was not further deep in doledrums unlike the United States and China.
''Indian real estate market has been unscathed when compared to many countries where the housing market had slumped,'' he added.
He said though the Initial Public Offer (IPO) route has drained a bit in view of the market conditions, real estate was attracting foreign private equity and foreign direct investment. During the first quarter of the current fiscal out of the total FDI flow into the country, 20 per cent was in realty, he added.
''Long term prospects of the commercial real estate market continues to remain positive owing to growing opportunities in sectors such as healthcare, hospitality, logistics and eduction,'' he said, adding that the residential housing market would also continue to show robust growth given the strong demand, favourable demographics, increasing urbanisation and rising disposable incomes.
Stating that the Indian real estate was ''sizzling red hot'' during the last three years, he said that the market grew too fast for its own good.
''Some developers went hopelessly haywire on land deals resulting in prices spiralling uncontrollably and investors began demanding unrealistic returns,'' he said, adding, when these investors retracted, many developpers were left scrambling for resources, prices fell and the confidence was shaken.
Mr Parekh said there was no instant relief for the pain and added that investors, instead of resorting to distress selling in panic must have a long term perspective.
''Indiscriminately chasing high returns invariably results in agonising losses,'' he said, adding that realty stocks were completely overvalued, some to the extent of 50 to 60 per cent at the time of their Initial Public Offers.
Currently, the industry was seeing a line of correction. Real estate companies could not be valued on the basis of land banks, but on projects that are being actually executed.
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