MUMBAI: Stocks of realty companies witnessed selling pressure today, falling by up to 6.5 per cent, after ratings agency Moody’s said weak housing sales and stagnant prices will pose challenge to big real estate developers over the next 12 months.
Shares of Indiabulls Real Estate slumped 6.55 per cent, Godrej Properties shed 4.74 per cent, DLF lost 4.33 per cent and Unitech fell by 3.95 per cent on BSE.
Similarly, Oberoi Realty was down 3.40 per cent and Parsvnath Developers lost 1.37 per cent.
The BSE realty index was down 3.17 per cent to 1,220.73.
Ratings agency Moody’s said, weak housing sales and stagnant prices will pose challenge to big real estate developers over the next 12 months as their cash flows and project execution capabilities get affected.
Developers will not reduce price to boost sales, rather will continue with their strategy to reduce apartment size and offer freebies, Moody’s Investors Service said.
However, the agency said that “solid economic growth” would give some support to housing sales, while gradual easing of lending rates would boost investment activity.
“India’s largest property developers will continue to face a challenging operating environment over the next 12 months – including weak cash flows, flat sales and stagnant prices,” the agency said in a statement while releasing a report on the Indian property market titled ‘Cash Flows to Remain Weak Amid Flat Sales and High Costs’ today.
Sales volumes will remain weak because of unaffordable housing prices, resulting in unsold inventories.