While terming all real estate investment as ‘high risk’, Religare has set lowered price targets for several realty stocks. DLF is currently trading 4.3% lower at Rs 288.75 (reduced price target: Rs 211), HDIL is down about 9% at Rs 132.70 (price target: Rs 142), Unitech is down over 13% at Rs 36.70 (reduced target price: Rs 34) while Orbit Corporation currently trades around 6% lower at Rs 60.15 (price target: Rs 85).

“Festival season has not sparked home buyer interest. As a result of the credit squeeze, most companies have withheld land acquisition or taking up further projects,” the Religare realty report said.

Another problem faced by developers is the need to delay existing projects as a result of low working capital. “Developers have already begun rescheduling their development plans and push back launch dates. This could enlarge the demand – supply mismatch in the longer run,” the report added.

Analysts expect demand to slump even further as recent rate cuts by RBI have not really rekindled buying interest. “In a slowing economy, when salaries remain stagnant with a downward bias, home buyers will not be keen to take up additional expenses by way of EMIs,” a Mumbai real estate consultant said.

Even if there is a price correction, it will take some time before demand actually pick up; analysts are expecting the lax trend to continue for the next 15 – 18 months.

Within the upcoming two years Private Equity (PE), out of the country firms venture in Indian market is likely to touch US$48bn. More than 400 such firms are in service in Indian market whose number would further scale up by another 69 or 70 by 2010, according to reports by The Associated Chambers of Commerce and Industry of India (ASSOCHAM)

According to guesstimate made by the ASSOCHAM in its yet to be published paper, Private Equity–The Money Tree real Estate sector is forecasted to be the best recipient of PE landscape in India which would give them profit margins, varying somewhere between 35% and even 50%.

In 2007, India attracted the highest PE investments, the assessment for which is projected at US$17.14bn from emerging economy together with China. With respect to India, China attracted less than 50% of PE investments in 2007, the guesstimate for which are at US$8.3bn.