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Developers feel liquidity squeeze

Developers feel liquidity squeeze

Apnaloan.com Research Bureau

02 May 2008

Realty developers are falling short of funds as funding sources are dwindling down.

The crunch is even more taxing in face of high interest rates and increasing property prices as well as those of steel and cement.

The increase in the prices of steel and cement, the input costs have increased by 20-25 per cent, which developers have to absorb for now.

According to reports, the liquidity crunch will have a greater impact in near future as real estate prices are likely to head south in the next 3-6 months.

One of the outcomes of the shortage is that the realty developers are reducing the prices of their projects.  Reportedly, DLF sold projects in Chennai and Manesar (Haryana) at Rs. 2,250 per Sq. Ft. other developers are offering various incentives such as free parking or free registration.

Many middle-level and local real estate developers are roping in private equity firms for funds.