Thursday, July 31, 2008

India Property - Worst Not Over

IT space office rentals have, for the first time, declined by 4-13% QoQ in 2Q08. Hiring by Top - 5 IT sector companies declined 48% YoY in 2Q08, indicating a prolonged downturn for the office sector.

With increasing supply, the mall occupancy rates have fallen by an average of 20% in the Top 10 Indian cities. Vatika (a Tier-2 but well known developer in the north) cutting prices by 10%+ in all its new launches. Transferable Development Right (TDR) prices in Mumbai have corrected by 12-15% over the past two months, suggesting a slowdown in the hitherto protected Mumbai market.

All the Property stocks are now rated to quote at a discount to their NAVs due to rising debt on their Balance Sheets [up by 20% QoQ]

Courtesy: CLSA

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