Indian Real Estate Companies should Not Be Listed: InGovern Research Services

By  Mr. Shriram, InGovern Research Services

The ongoing DLF Ltd  - Mr. Vadra controversy has brought to light the blatant transgressions that real estate firms - listed & un-listed - adopt in India. Real estate firms have never been known to be high on transparency & corporate governance.

Mr. Shriram Subramanian

This is just a reflection of the deeper morass in the real estate sector, which is by far the largest and most valuable asset class in India. It is not the marketplace that decides the fortunes of real estate firms, but the builder-politician nexus that picks out the winners in this sector.

Real estate sector should not be listed as the companies do not need shareholder funds, nor will they ever make any money for investors.

This is because:

(1)   The sector depends a lot on black money.

(2)   There is little transparency in plot of land values or / construction costs.

(3)    Politicians & bureaucrats have lot of discretionary power in deciding winners & losers.

(4)   Companies need to pay speed money to get all approvals for all stages of project development.

Minority investors are at the very end of the food chain for returns. Not many listed real estate firm has given decent returns to shareholders post listing.

 Aggrieved minority shareholders have little recourse, given the usually high promoter shareholding levels in listed real estate companies.

About the author..!

Mr. Shriram Subramanian is Founder & Managing Director at InGovern Research Services

Contact:

Mr. Shriram Subramanian

Landline: +91-80-42279150, Mobile: +91-9844244411

Email: info@ingovern.com, Web Site: http://www.ingovern.com

Office – Bangalore

107, 3rd Cross, 27th Main

HSR Layout Sector 1, Bangalore - 560102

Landline: +91-80-42279150

Office – Mumbai

A1-51, Mahindra Gardens

S. V. Road, Goregaon (West)

Mumbai 400 068

Share: