DLF has deferred some projects and plans job cuts to cope with the economic slowdown. Earlier this month it didn't plan to shed workers after profit fell by 4% in the three months to Sept. 30 and the number of employees declined by 12% during the quarter.
The global financial crisis is leading Indian stocks to their worst year on record, crimping purchasing power even as a five-year rally in property prices and increased borrowing costs hurts demand. All the infrastructure companies’ shares have plunged to nearly a fifth of their value at the start of this year amid a slump in property prices.
``The key thing is how to boost demand; prices have come substantially down, so much that projects will shut down. There is a lack of money supply to developers.''
The companies are paying 12% to 13% interest on loans, which continues to hit on bottom line. The government last month eased rules for companies to raise funds overseas. The Reserve Bank of India had reduced the risk provisioning for bank loans for commercial real-estate to 100 percent from 150 percent earlier.
Housing prices in smaller towns such as Agra, Ludhiana and Kochi dropped an average 15% to 20% in three months to Sept. 30. Rental prices for offices and malls also fell as much as 20% across India in the quarter. This is really a worst time for real estate developers. But the builders are not ready to reduce the property prices like other commodities have corrected very badly. Every one is waiting for further correction in prices. The worst yet to continue and the companies are going to screw very badly.
No comments:
Post a Comment