Awaiting Approvals

Mahindra Lifespace Developers Ltd. (MLDL) is the real estate and infrastructure development arm of the Mahindra group. The company was constituted by the merger of Great Eastern Shipping Company Limited and Mahindra Realty & Infrastructure Developers Limited. The company currently focuses on developing residential projects and large-format, integrated infrastructure developments such as business cities, industrial parks and special economic zones (SEZ). Sectoral outlook With the Reserve Bank of India (RBI) hiking interest rates 13 times since March 2010, mortgage rates have also climbed over this period. High home loan rates have now become a deterrent for investors. High property prices and the cap of 80 per cent on loan-to-value ratio imposed by the central bank have also added to buyers’ woes. Higher interest rates within the economy have also translated into higher borrowing costs for developers. With risk perceptions about the real estate sector rising, banks have also gone slow on providing funds to the sector. The BSE Realty index has tumbled around 48 per cent over the past one year, underperforming the Sensex by 26 percentage points. According to a report by Edelweiss Securities (October 2011), while rising mortgage rates have undoubtedly singed the sector, another key factor responsible for its underperformance over the past 12 months has been political and regulatory risks. Issues ranged from disputes over compensation for the acquisition of agricultural land in Noida, delays in project approvals in Mumbai and its suburbs, and c