Mumbai: India mid-cap real estate developers are expected to show a slump in sales by half to as much as 90% in the June quarter, as home buyers stay clear of purchases, according to a poll of brokerages by Reuters.
Margins are also seen squeezed as many launch cheaper housing to boost unit purchases, but the firms are expected to show a fall in their bottomline by at least 60%, or plunge to losses during the quarter over a year-ago, according to the poll.
“Mid-income is boosting demand. There is a huge gap in supply-demand.” Shailesh Kanani, analyst at Angel Broking said.
“Margins (are) likely to come under pressure due to change in product mix,” Macquarie Research said. “Sales expected to drop significantly year-on-year due to a slowdown in the physical property market.”
For the Reuters poll, which includes Ackruti City Ltd, Anant Raj Industries Ltd, Omaxe, Parsvnath Developers and Sobha Developers.
Besides launching lower-cost housing, builders have tried to reschedule loan repayments and raise funds through share placements with institutional buyers in the first half of 2009.
“Profit after tax (is) set to improve sequentially, and in the quarters ahead, owing to balance sheet deleveraging,” Religare Hichens Harrison said in a report.
“Going ahead, we expect a build-up of momentum in launches in the affordable housing segment,” a report by Edelweiss Securities said.
“General confidence in the economy and affordability will be the key demand determinants over the next one year,” according to the Edelweiss report.
Commercial demand, which helps builders’ expand, should revive by FY11, Angel’s Kanani said.