Stay away from Realty Stock, recovery of property market is illusion

Increasing interest rate is the primary reason for the slowdown in sales whereas it will finally affect to the developers those are having high debts.
According to the Standard Chartered Banks report from last 6months BSE Realty Index doesn’t brought any good news and world realty index by 47%. Apart from this Mumbai-based brokerage firm Ambit Capital Pvt. Ltd. reported that since April 2010 BSE Realty underperformed 500 by 36%. However there are several other reasons those are affecting to the property market such as ongoing investigation in 2G Spectrum by CBI as most of the realty firms have been mentioned in the chargesheet as they are having links with the defaulters.
High rates of property in Mumbai and Delhi, rising interest are showing challenge to Homebuyers as slowdown in sales property is the big concern.
Whereas as there are negative signals in the property market. “Debt equity ratio will reduce by 50% by 2012” Standard Charter report said. The report more added that valuations of these stocks will improve as these companies are on a stronger footing than in 2008, as most continued and forthcoming projects will contribute to their operating cash flows. After observing current state of market is the real state to invest in real estate? An analyst said on the basis of anonymity.
Report also comprises that approx 50% continued and forthcoming projects will contribute to the sales revenue of firms such as Oberoi Realty Ltd, DLF Ltd, Prestige Developers Projects Ltd, Unitech, Indiabulls Real Estate, Housing Development and Infrastructure Ltd (HDIL) and Sobha Developers Ltd. Says Parikshit Kandpal.