DLF plans land acquisition in New Gurgaon and Chandigarh

Real estate major DLF is planning to acquire land in New Gurgaon and Chandigarh in the next couple of quarters which it says will help increase its land bank and thus consolidate land holding of the company. For this purpose, DLF, which is the largest real estate company of India, will go for average quarterly investment to the tune of Rs 300-400 crore during the aforementioned period. Investment by the company for land acquisition purposes had already begun since the last quarter following the increase in demand in the housing sector. During the third quarter of the current fiscal the company had exceeded its capital expenditure by Rs 500 crore as a result of these investments.

Mr. Ashok Tyagi, the chief financial officer of DLF said that at the moment the company is concentrating on acquiring land and divesting its non-core assets. He said this while speaking at a conference which was attended by financial investors of the company. He revealed that some non-contiguous land of the company which was not giving much economic value was disposed off during the last quarter. DLF realized a total of Rs 2,900 crore from divestments. It reached this figure through divestment of non-core assets during the third quarter of the current fiscal which fetched the company Rs 403 crore.

40.4% dip in real estate stocks since Diwali

The worst performers since Diwali were real estate stocks although the BSE sensex had closed clocking 21005 which is an all-time high. As per the performance data of BSE (both sectoral and other indices) there was nearly a 3% gain in IT index whereas the real estate index showed a loss of 40.4%. Though there were also other losers like banking which was down by 20%, capital goods by 19%, and public sector units (PSU) by about 18% yet the realty index showed a downslide of nearly 22%.

According to market experts the reasons for this slump faced by the real estate sector may be because of the apathy shown towards realty stocks by investors and the low level of institutional holding. These factors have affected the performance of this sector. Edelweiss Securities stated in its recent report that there is robust housing demand in India but this demand is being dampened by rising interest rates, rising prices of residential properties and rising construction costs. In 2008 prices of residential properties had crossed peak levels in some cities. According to Edelweiss Securities sources these factors are still plaguing the real estate sector and are thus acting as dampeners thereby deterring the possibility of investments.