Realty Readings: Cement & steel, Valuations, Interest rates
- Financial Express: Realty says cement, steel cos ‘cartelising’
The real estate industry on Saturday hit out at steel and cements Companies for cartelisation, saying it has increased the cost of construction and affected the affordability to consumers.
NAREDCO President Rohtas Goel said the sharp rise in the prices of steel and cement have increased the construction cost by Rs 230 per sq ft.
- Economic Times: US housing crisis melts Indian realty valuations
Some leading Indian real estate firms are trading at about 34% discount to their net asset values (NAVs), which implies that property firms are being valued at just two-thirds of the assets they hold.
“Historically, when the property market cycle is on an upswing, firms trade at a premium to their NAVs, and during a downturn, this tends to get reversed with shares trading at a discount. Since real estate stocks are high risk, the trend gets amplified.”
Indian property stock prices have dropped as much as 50-67% and underperformed the Sensex by 23% in the first quarter of 2008.
“With the exit of speculators from the residential market, the transaction volume is down by almost 40%.”
- Financial Express: No hike in interest rates at least till Apr 29: Bankers
Ruling out any possibility for jacking up interest rates due to 0.5% CRR hike announced by the RBI on Thursday, country’s leading bankers said they would wait for the annual policy.
With the 50 basis point hike in CRR, margin of banks would be squeezed by 3-4%.
Combine this with slower credit growth, and a sub-8% GDP growth, and you wonder how much upside there is for bank stocks.
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