Developer Shakeout Begins - Small Players Out

The shake out in the real estate market has begun. Small Players who do not have any means of finance and who have desperately bought land at highly abnormal prices are feeling the heat and are selling themselves to large developers.

Pradeep Jain, Parsvnath Developers, said,

I am sitting on, at least, five-six such proposals. Some deals are at an advanced stage. The small-time developers are mainly offering land that they had acquired earlier.

Mr. Vakil of Knight and Frank Said,

Small developers are under pressure now. Fund flow into this sector has begun to dry up. Selling incomplete projects to big developers or private equity firms is an option explored by many such developers. A sharp fall in sales would force them to cut the price in the coming months. The trend is visible in many suburban markets.

RBI has cut all sources of finance for this segment of industry which is largely dominated by Politicians and Black Money with muscle power. RBI along with SEBI have also proposed 3 year lock in for Foreign investment in Indian Real Estate to curb speculation.

Source: Economic Times, June 27-2007.