Indian Realty Companies Most Expensive in the World

Standard & Poor's, just a while ago released a report in which they reveal that Real Estate stocks in India are the most expensive in the world even as they give lower returns than most of the emerging as well as developed markets including China, Singapore, Hong Kong and Australia. This revelation has come in the backdrop of a seven-year bull run in the global property stocks coming to an end in the second quarter of 2007.

P/E ratio for Indian stocks was highest among all countries, while return on equity (ROE) was second lowest among all emerging markets and lower than most of the developed markets.

The S&P study put the last 12-month P/E for Indian stocks at 209.30, against just 29.69 in China, 39.90 for the US and 3.18 for the UK. On ROE front, Indian stocks gave a 7.15 per cent return, lower than the global average of 7.3 per cent.

The rally in the emerging market realty stocks, appears to be mostly driven by the Chinese stocks with top five global gainers for the quarter coming from China.

Globally, property stocks fell by 4.5 per cent on an average in the quarter as measured by the S&P Citigroup Global Property Index with sharp falls being registered by the stocks from the US, Europe and other North American markets.

Top five performers were Medinet Nasr Housing from Egypt, China Vanke Co, Beijing North Star Co and Shg Lujazui from China, besides Amata Corp from Thailand.

Standard & Poors Index Services Vice President Alka Banerjee [An Indian] said,

A prolonged seven-year stretch of continuous gains, leading to excessive valuations, decreasing yields and a legitimate desire for profit taking caused a sell off in the sector.

REIT indices for Europe, US and the rest of the world fell. Also in such market conditions, Bangalore based Purvankara Projects is planning to raise $250 Million at a P/E Valuation of more than 80.