Some of upcoming real estate IPOs may falter: Consultant


Updated: Nov 18, 2009, 20:40 PM IST

Mumbai: A couple of real estate IPOs may falter from around 15 lined up in the next few months if the issues are not reasonably priced, a realty consultant said.
"Around 15 real estate IPOs have been lined up. They plan to raise in excess of USD six billion. I don't think that all of them are going to have a smooth journey. One or two may falter, as well," Anuj Puri, Chairman, Jones Lang LaSalle Meghraj, told reporters here.
Puri said unlike previously, when investors lapped up issues at any price, this time, investors would like to see the pricing, the credibility of the developers and their ability to execute the undertaken or proposed projects, before subscribing.
"This time, the market will differentiate on three factors - what's the price, credibility of the developer and the delivery capacity of the developer."
Investors would like to see how transparent is the developer, the level of corporate governance in the company, the brand, the pricing of the issues and how much is left for the investors to be benefited, Puri said.
"The capacity of the developers is going to be viewed under the microscope. If one says that he is going to develop 50 million square feet and has completed only five million, investors are not ready," Puri said.
The market also, he said, does not have the appetite for USD six billion real estate IPOs as the problem of liquidity still persists with the real estate sector, which had been badly hit by the economic slowdown.
"There is no liquidity problem as such in the market. But, it is a problem for the real estate sector. The market does not have appetite for so much," he said.
 Among the upcoming public issues,
Sahara plans to raise Rs 3,450 crore, Lodha Developers Rs 3,000 crore, Godrej Properties Rs 600 crore, DB Realty Rs 1,500 crore and Kumar Builders Rs 450 crore, among others.
Emmar MGF has also filed a draft red herring prospectus (DRHP) with the market regulator SEBI and plans to raise Rs 3,850 crore.
Bureau Report