The real estate sector of India who was once regarded as the high risk taking investment sector is facing liquidity crises and is going through a low phase in terms of interests’ rates, escalating commodity prices, inflation and interest rates. Many midsized and small Indian property sects are facing default risks as the debt of the sector is very high. In September 2005 the debt was of $ 3.8bn and now in the month of July it has increased up to $ 24.3bn which is almost seven times of the previous debt. One of the reasons of this problem could be the delay of projects and discounting properties by the major developers in the real estate sector. An analyst of MF global says that it is one of the nastiest liquidity crises the world has faced till now.
The biggest developer DLF by selling its non-core assets like land and hotels is trying hard to raise as much as Rs 100bn. According to a data given by Bloomberg the debt burden of DLF moved up to $4.4bn. In the end of March DLF paid up to $25.9bn in interests. Saurabh chawla, DLF’s executive finance director said that the living environment of people has become very different. Moderation in demand will bring change in costs and cost of capital mortgages. Many major developers are facing trouble in seeking new buyers and also in completion of products.
The biggest developer DLF by selling its non-core assets like land and hotels is trying hard to raise as much as Rs 100bn. According to a data given by Bloomberg the debt burden of DLF moved up to $4.4bn. In the end of March DLF paid up to $25.9bn in interests. Saurabh chawla, DLF’s executive finance director said that the living environment of people has become very different. Moderation in demand will bring change in costs and cost of capital mortgages. Many major developers are facing trouble in seeking new buyers and also in completion of products.
