India's largest Foreign Institution is little worried about the Real Estate Sector in India now. A day after Merill Lynch downgraded NCR's leading Developer Ansal Properties, Citi expressed concerns over PAN India Realty development. The report said,Ongoing incentive schemes to enhance residential sales. Buyer preferences on ready-to-move vs. under construction projects and liquidity constraints; all of which suggest the operating environment for developers is getting tougher.Real Estate Developers are now walking on Tight Liquidity before they panic and start to unload their stock. Some small developers have started offering assured returns of 9-12.25% [That's all ??? Gone are those days of 30%-50% ???] on upcoming office/retail projects primarily located in Gr.Noida, Gurgaon, Faridabad in NCR. This to act as substitute to increased cost of borrowing at ~16-18% from primary sources and help address liquidity issues.
With global Oil prices hitting a record $134 / barrel, macro situation in India will only worsen giving rise to Inflation and tighter liquidity problems when these Developers will start offloading, hopefully :-)
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