People in India swear by the success of the real estate sector, and understandably so, for it is the country’s second largest employer and contributes to approximately 5% to its GDP. The sector received foreign direct investment (FDI) of about Rs213.7 billion (US$4.5 billion) between April 2007 and March this year, second only to the services sector.
However, with the collapse of Lehman Brothers in September 2008, cracks in what was until then a rosy lens appeared to show, and what followed crippled the liquidity centric real estate market in India completely. With demands dipping to record lows and FDI drying up, real estate players were forced to think out of the box and devise innovative strategies indicating a sea change of guard.
Associate
Amarchand & Mangaldas &
Suresh A Shroff & Co
Raising funds
The year 2007 witnessed real estate companies raise substantial capital from the primary market with DLF hitting the market first and many following suit until mid-2008, when we saw the equity market meltdown closing the primary market almost instantly, even forcing already floated IPOs to withdraw.
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Mrinal Sharma is a principal associate and Avnish Sharma is an associate at Amarchand & Mangaldas & Suresh A Shroff & Co.
Amarchand Towers
216 Okhla Industrial Estate – Phase III
New Delhi – 110 020
Tel: +91 11 2692 0500
Fax: +91 11 2692 4900
Email: shardul.shroff@amarchand.com
