Investors may have lost 1/3rd investment in real estate

Last Updated: Saturday, August 8, 2009 - 00:31

Mumbai: Investors have pumped in USD 25
billion into the Indian real estate market over the last three
years but with land values having gone down they could have
lost a third of the value of their investment, HDFC chairman
Deepak Parekh said in a letter to shareholders.

Parekh said investors have invested over USD 25 billion
in Indian real estate through IPOs, QIPs (qualified
institutional placements), AIM listing (alternate investment
market) and foreign direct investment. A large part of these
funds were used for buying land at exorbitant prices.

"With land values having come down, my estimate is that
investors could have lost a third of the value of their
investment," he said.

Advocating caution, Parekh said investors in real estate
have to be more discerning. They should be more realistic on
valuation expectations and not throw caution to the wind, he
said.

He also criticised the recent trend where housing loans
are offered at attractive interest rates in initial years.

"We are seeing some variations of teaser type housing
loans being offered. The lure of low interest rate at the
start of taking a housing loan is enticing. But are customers
being made aware of future implications," he asked.
Parekh noted that the genesis of the US housing crisis
lay in loans that offered artificially low interest rates in
the initial years but once the rate normalised, many found
themselves unable to service the loan.

These are the lessons one should learn from, he said.

However, the HDFC Chairman pointed out the same
disturbing trend being seen in India where some variation of
teaser type housing loans are being offered in the market.

"Are these lending institutions providing "what if"
scenarios to their customers, he asked.

Bureau Report



First Published: Saturday, August 8, 2009 - 00:31

More from zeenews

 
comments powered by Disqus
Party Won Trends Swing
BJP 122 122 76
SHS 63 63 19
INC 42 42 -40
NCP 41 41 -21
MNS 1 1 -12
OTH 19 19 -22
Party wise Trends/Tally | Key Candidates | Vote Share
Constituency Wise Results Interactive Map
Party Won Trends Swing
BJP 47 47 43
INLD 19 19 -12
INC 15 15 -25
HJCBL 2 2 -4
OTH 7 7 -2
Party wise Trends/Tally | Key Candidates | Vote Share
Constituency Wise Results Interactive Map