Signs of Revival in Indian Real Estate Sector During 2013..!

Land Acquisition and Real Estate Regulation Bills (LARERB) are expected to be passed soon, while there is a likelihood of RBI (Reserve Bank of India) bringing down the interest rates.

"The passage of FDI in multi-brand retail by the government shows its seriousness on introducing reforms.RBI can be expected to lower interest rates in the coming months which will benefit developers as well as consumers.This will boost the sentiments,"

 Mr. Pranab Datta, Chairman, Knight Frank India said, '' FDI (Foregin Direct Investment) in multi-brand retail will also boost the demand for commercial real estate.

According to Jones Lang LaSalle India major cities such as Mumbai, Delhi - NCR , Bangalore, Chennai, Pune, Hyderabad and Kolkata will see the addition of close to 95 lakh square feet of mall space in 2013.

REITS in Rental Housing Market..!

The central government is working on a proposal to allow real estate investment trusts (REITs) to participate in India's rental housing market.The Housing and Urban Poverty Alleviation Ministry is framing a policy paper on REITs & it will be taken up with the finance ministry.

Official estimates peg the shortage of houses in urban areas at over 187.8 lac. To meet this requirement the central government would have to spend over Rs. 10 lakh crore, assuming an average expenditure of Rs. 6 lakh per house.

Improve in 2014..!

According to Rating agency CRISIL, With a revival expected in the real estate sector on the likelihood of reduction in interest rates, the return on equity & profitability of real estate developers is expected to improve in FY14 (2013-14)

Over the last 2 years, the real estate industry players had suffered a major setback mainly due to subdued demand, high construction costs & higher interest rates that were responsible for the weak earnings ratio.

According to the CRISIL report, earnings of 23 listed companies declined 21% and 9% in FY12 and first half of FY13, respectively. Further,the RoEs (Return on Equties), too, declined from 7.7 % in FY10 to 4.7% in the first half of this fiscal year (2012-13).

Subdued demand & high construction costs impacted revenues and margins.This coupled with high debt & rise in interest rates dented earnings & return ratios.The earnings are expected to remain muted for the rest of FY' 13.  But should pick up in FY' 14

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