March 18, 2010
Although most of the ample to mid-sized fresh offerings have received a cold response, the news is that quite a few real estate companies are bent on going ahead with their initial pubic offering (IPO) plans. Rumor in the market is that apartments at discounted rates in the projects of these companies in return for subscribing to the issues seem quite attractive to a few fund managers.
Due to the big margins in the business and the fact that these projects are not yet completed, this kind of plan will not be very expensive for the real estate firms. In comparison with the hundreds of crores that are on stake, these few crores seem like nothing to these Realtors. Market analysts claimed that at least two companies which came out with IPOs recently had such a plan with some fund managers.
As expected, despite expensive valuations, both the offerings witnessed a huge response from institutional investors. Since along with the stock market backing the property developers, the banks are also reducing their funds in the real estate sector, it has become an acute situation for many money-starved builders.
