Big crack in Indian realty

The realty sector, which grew at an amazing 35 per cent last year and was estimated to be worth $15 billion, is in the doldrums. With rising input costs of steel, iron and building material, it has become unviable for builders to construct properties at agreed prices. As a result, there are delays in project completion, leading to financial constraints.

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Property prices and rentals are correcting and the stock prices of some of the companies have declined by as much as 75 per cent from their 52-week highs. The Realty Index of the Bombay Stock Exchange has declined over 80 per cent this year. Real estate companies, which have a presence in the index, saw an erosion of about Rs 20,000 crore in market capitalisation.

Text: V.R. Vinod Kumar

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