sluggish economic growth and poor market sentiments are affecting the real estate sector, which saw a decline in terms of new investments in 2012-13 all over the country. The sector's investment commitment for the financial year 2012-13 was only Rs 42,000 crore, against Rs 92,600 crore in the previous financial year (2011-12), as per an analysis done by trade body Assocham with the help of the Centre for Monitoring Indian Economy (CMIE).
The CMIE is a business information company, which produces economic and business database and develops specialised analytical tools for decision making and research. It also deciphers trends in the economy.
Awadhesh Sharma, who did the analysis, said while the overall trend remained negative, Gujarat saw a surge of new investment commitments during the period. "The new investment commitment was Rs 2,000 cr in 2011-12, but in the last fiscal, this increased to Rs 17,000 cr," he said. Realty accounts for over 11% share in the total outstanding investments in both private and public sectors. Other states that saw an increase in new investment commitments are Kerala (550% increase), Uttarakhand (400%) and Rajasthan (175%). The rest of the states witnessed a decline of 50% in investments.
Gujarat also has the highest share of 41% in new investments attracted by the real estate sector. Gujarat is followed by Maharashtra (17%), Karnataka (10%), Tamil Nadu (8%) and Uttar Pradesh (6%).
However, in the case of total outstanding investments, Maharashtra has a 20% share. The state attracted Rs 3 lakh crore in real estate until March 2013. However, as for new investments, the state saw a drop in the last financial year, from Rs 16,000 cr to Rs 7,000 cr.
The real estate sector is facing challenges like falling sales, increasing construction costs and low market sentiment. Add to that sluggish economic growth, high interest rates, high inflation and poor industrial production due to which realtor companies are selling their land to reduce their debt.
According to an official of Jones Lang Lasalle, a leading realty firm, the last financial year was inactive, affecting all major sectors in real estate. "Office space absorption remained lower compared to 2011-12. Residential developers are struggling with unsold projects," he said.
The CMIE is a business information company, which produces economic and business database and develops specialised analytical tools for decision making and research. It also deciphers trends in the economy.
Awadhesh Sharma, who did the analysis, said while the overall trend remained negative, Gujarat saw a surge of new investment commitments during the period. "The new investment commitment was Rs 2,000 cr in 2011-12, but in the last fiscal, this increased to Rs 17,000 cr," he said. Realty accounts for over 11% share in the total outstanding investments in both private and public sectors. Other states that saw an increase in new investment commitments are Kerala (550% increase), Uttarakhand (400%) and Rajasthan (175%). The rest of the states witnessed a decline of 50% in investments.
Gujarat also has the highest share of 41% in new investments attracted by the real estate sector. Gujarat is followed by Maharashtra (17%), Karnataka (10%), Tamil Nadu (8%) and Uttar Pradesh (6%).
However, in the case of total outstanding investments, Maharashtra has a 20% share. The state attracted Rs 3 lakh crore in real estate until March 2013. However, as for new investments, the state saw a drop in the last financial year, from Rs 16,000 cr to Rs 7,000 cr.
The real estate sector is facing challenges like falling sales, increasing construction costs and low market sentiment. Add to that sluggish economic growth, high interest rates, high inflation and poor industrial production due to which realtor companies are selling their land to reduce their debt.
According to an official of Jones Lang Lasalle, a leading realty firm, the last financial year was inactive, affecting all major sectors in real estate. "Office space absorption remained lower compared to 2011-12. Residential developers are struggling with unsold projects," he said.
http://www.sunday-guardian.com/business/real-estate-sector-faces-drop-in-investments-in-2012-13
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