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Real estate developers confident of fund flow

Posted by :   22/09/2008

Real estate developers are carrying on with their projects, unfazed by the global financial turmoil that is expected to hit the Indian real estate sector. They remain confident about flow of funds, despite the prevalent crunch.

“Funding (for our projects) will not be an issue. We are accepting funding from a lot foreign agencies, some of them being HSBC, HDFC and ILFS,” said Rakesh Jain, executive director, Ansal API. He however expects funds to shrink if the RBI hikes interest rates further.

Vipin Agarwal, executive director, Omaxe Ltd, however, is a tad more optimistic. “Different countries are taking measures to bail out their banks. As a result, banks are going to be refurbished with liquidity. There is no reason why this liquidity will not flow into Asian countries,” he said.

Sharing the optimism, Shobhit Agarwal, joint managing director, capital markets, Jones Lang LaSalle Meghraj said that many new funding agencies will now decide to operate in the market. He said, “Some PE funds exercised caution at a time when others went overboard with doling out mortgage loans. Once these conservative funds come into the field, market dynamics will change once again.”

Incidentally, Indian realty stocks tumbled by almost one thousand points after the buyout of Merrill Lynch and collapse of Lehman Brothers, the world’s third and fourth largest investment banks respectively. While Jain thinks that all realty operators are trying to figure out ways to cushion their stocks from impact of the global meltdown, Agarwal believes in the philosophy of what goes down also comes up.

“Realty stocks will go up,” he said. Jain added that stocks are going down mainly because of negative sentiments and that the fundamentals of the sector are strong.

Both Jain and Agarwal claim that their order book is “very healthy”.

“We have a pending order of 1.5 billion houses in the mid-income segment,” said Agarwal. He expects mortgage rates to go down, taking a cue from inflation, which is currently on a downward mode.

Both Ansal API and Omaxe Ltd are focusing on MIG housing. The ongoing projects of Ansal API include Sushant City-Jodhpur and Jaipur, Sushant Golf

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