Unitech postpones project launches

Unitech Ltd, Delhi / NCR and Kolkatta based Realty major has postponed the launch of majority of its projects due to the slowdown in the Indian property market. Unitech's 4QFY08 revenues were much below consensus estimates, decline 27% on a yoy basis; PAT declines 52% yoy, 31% qoq. Its venture into Telecom is another bleeding diversification without any value to existing shareholders.

We have verified the facts about new project launch and management was mum on the same. We are attaching a chart below which Management had presented in October-2006 about future project launches which it has failed to execute. The failure is on whopping 75-80% of the projects.

It looks like their is more pain to come from Gurgaon property market. Look at the chart above, Unitech has not launched any of the projects that it promised in Gurgaon and is already running 12 months behind schedule. No new projects are launched in Chennai, Kochi, Kolkata and Hyderabad - All of them were scheduled to be launched in Q2/Q3-2007.

It has launched one project in Bangalore and Small Portions in Noida. Looks like Unitech will follow its peer Parsvnath Developers Ltd. Unitech stock has tumbled 70% from its Jan-2008 high.

Separately, the Indian Income Tax Authorities have brought all Real Estate Deals under scanner because it involves large amount of unaccounted money aka., Black Money to catch tax evaders.

Indian Realty Stocks Hit New Lows

With the Indian Inflation sky rocketing to double digits, foreign institutional investors who were the main buyers of Real Estate Stocks in India have mercilessly dumped. The carnage has gotten worse because Domestic Institutions are in no mood to pick-up stocks of these realty companies which absolutely have no transparency in their operations. Falling Land Prices is adding to realty Company woes. A broker even went to the extent of saying Politicians have started liquidating their Land holdings ahead of the General Elections.

Almost all of the Real Estate Stocks hit a new low in todays trading though Nifty managed to hold 4,500 levels.
Most realty stocks have fallen between 77% and 51%. Ansal Infra, DLF, SOBHA Developers, UNITECH all recorded new lows. Realty companies which were listed in the past 12-24 months have fallen below their issue Price. However, the good news is India is not in any sub-prime kind of crisis, its just the Greedy Realtors who have lost sleep as they built their structures using paper-cards and not bricks ;-)

Property Developers Starving for Cash - Time to bail them out ?

The Economic Times is carrying an exclusive on how Realtors are facing cash crunch.

But is it the right time to bail them out ? Not really. At least I am personally waiting for 3 to 4 months more [from past experience and feeling, realtors will desperately unload and that is the time to pick-up] , but now I am ready to start looking out [you never know, you may get a deal soon] because earlier these A$$holes were so arrogant, they even refused to talk, now they are offering a pick-up by car. Truly unprofessional Morons LOL

I wonder what has happened to India's Most Expensive Realty Deal - BPTP Delhi. Are they filing for bankruptcy ?Or have the promoters already left India ?

India Commercial Property Update Q1-2008

Rentals in most micro-markets of these cities other than the commercial business districts (CBD) are at the same levels as in 4QCY07. There are a few are as like Noida and OMR road in Chennai where there is a situation of oversupply and high vacancies, though Mumbai, Gurgaon, Hyderabad and Kolkata are still doing well while Bangalore still provides the highest volumes. As expected, SEZs have commanded a premium over IT parks.

Mumbai Commercial Property Update:
Rental values have remained stable and are the same as Q4-2007.
1QCY08 supply (mn sqft) 2.1
1QCY08 absorption (mn sqft) 2
1QCY08 QoQ rental increase (%) - Nil
Pre-commitment (mn sqft) 0.6

Delhi NCR Commercial Property Update:
The commercial segment of Noida witnessed 5% appreciation in rental values over the previous quarter due to dearth of options catering to this segment but for IT space there was a drop of 3% to 10% in rentals due to addition of fresh supply in Noida.

1QCY08 supply (mn sqft) 1.4 1.4
1QCY08 absorption (mn sqft) 0.6
1QCY08 QoQ rental increase (%) 5[Gurgaon] -3 - 10[Noida]
Pre-commitment (mn sqft) 1.4 0.2

Kolkata Commercial Property Update:
1QCY08 supply (mn sqft) 0.7
1QCY08 absorption (mn sqft) 0.4
1QCY08 QoQ rental increase (%) 0 - 17
Pre-commitment (mn sqft) 0.7

Chennai Commercial Property Update:
1QCY08 supply (mn sqft) 1.1
1QCY08 absorption (mn sqft) 0.65
1QCY08 QoQ rental increase (%) Nil
Pre-commitment (mn sqft) 0.55

Bangalore / Bengaluru Commercial Property Update:
1QCY08 supply (mn sqft) 6
1QCY08 absorption (mn sqft) 3.6
1QCY08 QoQ rental increase (%) 4 - 9
Pre-commitment (mn sqft) 1.5

Hyderabad Commercial Property Update:
SEZ developments are expected to command a premium in rentals over the STPI units.
1QCY08 supply (mn sqft) 0.37
1QCY08 absorption (mn sqft) 0.3
1QCY08 QoQ rental increase (%) 2 - 15
Pre-commitment (mn sqft) 0.4

Source: Cushman & Wakefield Marketbeat.

Realty Stocks in Free Fall Mode

The Indian Realty shares have witnessed a FREE FALL without any BUYING support at all. Realty major and SENSEX constituent DLF has hit an all time low of Rs 521, [even below its IPO issue price of Rs 525 Recall How DLF Cheated its Investors showing the true colors of its Management.]At 1:20PM, Ansal API and Unitech have hit a new 52 week low. Indiabulls Real Estate another purely speculative company without any fundamentals has witnessed massive selling.

Omaxe, HDIL, Parsvnath Developers, Sobha Developers and Purvankara projects have all corrected by more than 50% from their all time highs and are all quoting below their IPO Issue prices. These stocks are under performing benchmark indices as they have hit a new low already while benchmark Indices [SENSEX / NIFTY] are still above their March Lows.

Most analysts on Dalal Street attribute this massive SELL OFF in realty stocks on expectations of atleast 25% correction in selling prices of developed properties.

Ahmedabad Residential Real Estate

Here is an excerpt from Goldman Sachs' views on the property market in Ahmadabad. Average Residential prices has doubled in the past 2 years from Rs 1,200-Rs 1,300 to Rs 2,500. Goldman adds,

Ahmedabad have traditionally been low as it is a market that does not benefit much from inter-state urbanization unlike Surat, which has a thriving diamond industry. Also, Hazira, in Surat district, is an industrial hub. New township and IT policies are likely to be announced in the near term, which could help develop an IT industry in Ahmedabad. Residential prices could rise 10%-15% over the coming years.

Goldman on Retail Rentals,

Prime retail locations in Ahmedabad include SG Highway and CG Road in the western side of the city. We believe current market rentals are around Rs100/sq ft/month along SG Highway and rates can be as low as Rs40-Rs50 for anchor tenants. In a year, rents in the western parts could come down to about Rs80/sq ft/month given projected supply.

We feel by the end of the year, real estate prices will be reasonable and loans more affordable to the consumers.