Market slowdown Affects Hotel Development

With real estate stocks being hit adversely by the market slowdown, the phenomenon is expected to have a spiraling effect on hospitality development in India. Most real estate majors with a series of hospitality developments in their portfolio are affected by this trend. This may lead to a stall or delay in the completion of projects as well as a revision of the project expenditure. Over the past few months, real estate stocks have seen a major downfall, with an average of 60 to 65% drop in the share prices during 2007-08.

Prem Subramaniam, Head, Infrastructure Development Finance Company (IDFC) said, “There is not only a slowdown in the market, but also an alteration in project costs with the configuration of interest rates”.

While financial market analysts expect the decline in real estate stocks to continue in coming months, they also speculate that hotel projects will be stalled due to lack of liquidity and equity funding in the markets. On the contrary, hospitality consultants feel that projects that are already secured with funds will not be affected.

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