(This post deals with a view about realty sector players in the Indian Market,especially DLF. Read full details at ... http://www.livemint.com/2008/09/05003413/DLF-yet-to-start-work-on-Mumba.html)
Hi Madhurima
No one contests the financial might and lobbying abilities of the collossus, DLF.However in the regime of increasing interest rates and plataeuing consumer demand, (read recessionary symptoms/ slowdown), i am not surprised that DLF is going slow.
1. As of now, it seems that DLF has invested more than it is comfortable with in a horizon which is uncertain. Consumer demand is not exactly the shade of pink it used to be.
2. While partnerships with other real estate cos, would help DLF tide over the credit/cash crunch, yet the cash flows from exiting projects would not be as promising.
3. There would be some inventory (ready to move in, unsold properties) which DLF would be stuck with.
4. Hence the delays and slow execution...
5. Compare it with players such as Indiabulls etc, who donot have significant inventory at hand. Hence they can continue to invest, from their P&L standpoint.
6.One thing that really beats me is most of the projects that are being advertised, are targetted to the Medium High level consumer. We havent heard of mass housing schemes. Thats where most of the real estate companies are missing the trick.
7. Mass housing solutions (i remember Brazil having done one of these projects successfully) would be key to spurring growth in this sector in the years to come.
8. Besides, the development at the tech parks and SEZs that has happened has been much unplanned and infrastructurally bottled up. One just needs to see the Cybergreens/Gurgaon and Hyderabad at peak hours to understand how badly the projects were concieved.
9. Bottomline... Cos like DLF will have giant successes and those irritating nags that will be a cash drain. DLF probably needs to look at more economical solutions catering to wider audience solutions in "building India".
Thanks
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