New Delhi: Profitability of realty majors
declined by 56 per cent in the first half of 2009-10, which
contradicts concerns over formation of a housing bubble in the
country, industry body Assocham said today.
"Financial performance of realty majors during the first
half of current fiscal shows grim picture of the sector with a
decline of 56 per cent in net profit, dampened by 51 per cent
rise in financial charges and interest cost," Assocham said.
The total income of realty majors declined by average 40
per cent in line with the fall in net profit whereas the total
expenses of sector registered an average decline of 35 per
cent despite an increase of 51 per cent in interest cost.
To prevent any formation of asset bubble, RBI in the
quarterly monetary review last month asked banks to keep more
money aside while giving loans to commercial real estate.
RBI said real estate prices, after showing some
corrections in the later part of 2008 and early part of 2009,
have risen significantly in major cities.
The chamber said the bank credit to the sector for one-
year period till August-end this year was Rs 28,353 crore,
up 41.5 per cent in comparison to same period last year.
In stark contrast, home loans amounted to Rs 14,668
crore, up by only 5.4 per cent, which contradicts a housing
bubble scenario in India.
"The demand-supply mismatch is
unlikely to trigger a boom-bust situation due to tight
regulation by RBI," it said.
Bureau Report
First Published: Tuesday, November 10, 2009, 18:48