Greed in Stocks Destroy Traders Investors Wealth

The Investors / Traders Greed for Indian Real Estate stocks has destroyed their portfolio as the famous theory of Radio Active Decay applies to investing in this sector. We have actively covered how stocks have fallen Month over Month and the following screen shot [expandable image] of Live prices is a proof :-)
Real Estate in India is dominated by Shady people of the society - Politicians, Bureaucrats, Black Money Businessmen etc. The forthcoming election is seen as a strong chance for Realty Developers to lobby with the Government asking for doubling of income tax rebate on home loan interest to Rs 3 lakh from Rs 1.5 lakh, hiking the limit of income tax exemption on rentals from 30% to 50%. Apart from enjoying an infrastructure status, further demands of realty sector is under consideration of finance ministry.

Even if the government does what is lobbied for the demand in Indian Real Estate will not pick up immediately. When cash rich companies like Microsoft are firing employees to face the slowdown, Indian employers are under tremendous pressure and hence employees, the ultimate consumers of real estate will stay away. Indian IT is the Worst Employer in 2008 according to FreePress India.

What about Black Money local businessmen, won't they com forward to invest ? No not immediately because Developers have jacked up the prices to such an extent that RoI even for these businessmen is not seen viable.

Affordable Housing or lowering the prices by further 25% is the only solution to this problem. Otherwise, soft corner from RBI Governor will create a mini sub-prime bubble of Real Estate Developers in India if it fails to recover the loans given by Banks to these Shady / Greedy Developers [After all, its our Deposits which the bank has lent]

How Realty Stocks Destroy Investors Wealth

We have been tracking this sector for over 2 years now and here is how Real Estate Stocks in India destroyed Investors Wealth over the past 4 months. They have been halving like a Nuclear Fission but the only difference here is [Wealth is Destroyed] Expandable Image Comparing the Values of Realty Stocks Month Over Month.

In the above image [expandable] you see how Indian Realty Stocks have halved in months time :-)

Worst is Not Over for Real Estate:
Corporates have started Defaulting and withdrawing abnormal bids for Land. Citra Developers, a 100 per cent subsidiary of Indiabulls Real Estate, withdrew its Rs 6.76 bn bid for the 134-acre PALPeugeot land in the Dombivli-Kalyan region, about 100 km outside Mumbai.

Jet Airways, which had bid successfully for a prized Bandra-Kurla Complex (BKC) plot in Mumbai for a whopping Rs 8.26 bn, has walked away from the deal.

India Realty Stocks - New Low

The Indian Realty Stocks representing the Absurd Builders and Developers have hit a new low as nobody wants to own them anymore. Here is how UGLY they look like.
We have been Realty Bears ever since these Developers started sucking blood of innocent and hard working middle class Indians.

Realty Stocks - All Time Low

The Indian Real Estate Stocks which have been crashing since few months now have hit a new Life Time Low. Their are no buyers for these stocks due to the flawed business model as earnings visibility of these companies has disappeared. [Evident from Advance Tax Nos]
First time Home Buyers can hit the street to look for bargains. Don't RUSH to close the deal as these Realtors will come down to more affordable pricing in existing projects. [Forget new ones, they have to clear the inventory to generate working capital]

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 ;-)

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.