Mumbai Attack Will Hasten Slide In Property Stocks: JLL

Source : The Business Times, December 4, 2008

(MUMBAI) India's worst terrorist attack in 15 years will accelerate a slide in property stocks that have already plunged this year on investor concern about faltering demand, Jones Lang LaSalle Inc's local unit said.

The attacks last week on Mumbai's luxury hotels, a restaurant, railway station and a Jewish centre will add to costs such as insurance premiums, Mridul Upreti, joint managing director for capital markets at the commercial property broker, said in an interview in New Delhi on Tuesday. At least 195 people were killed and 295 injured in the attacks over 60 hours.

The terrorists' strike is the latest setback to a sector that has already slumped 88 per cent as the rise in property prices and borrowing costs led to a slowdown in demand, Mr Upreti said.

DLF Ltd, India's biggest developer, has said a recovery in the property market in the next six months hinges on lower home-loan rates to lure first-time buyers as the economy falters.

'Last week's unfortunate incidents are going to accelerate the bearish trend,' Mr Upreti said. 'The demand is slowing in the property sector. We have interest rates at a historic high and limited investor demand for property stocks.'

The Bombay Stock Exchange's Realty Index has declined 88 per cent this year, surpassing the 57 per cent drop in the Sensitive benchmark. A five-year rally in property prices and rise in borrowing costs have subdued demand.

DLF has dropped 83 per cent this year. Unitech Ltd, the second largest developer, has fallen 95 per cent.

DLF and Emaar MGF Land Pvt., the Indian unit of the Middle East's largest real-estate developer, are also cutting prices to revive demand. Goldman Sachs Group last month forecast some property prices in India will drop 30 per cent. -- Bloomberg