Enter the complicated world of real estates


Indian Real Estate Stocks Most Expensive in the World

Real estate stocks in India are the mostGermany, Finland, Greece, Ireland, Norway,
expensive in the world even as they giveSweden, China, Indonesia, Malaysia,
lower returns than most of the emerging asPhilippines, South Africa, Taiwan and
well as developed markets including China,Thailand.
Singapore,  Hong  Kong  and  Australia.
The rally in the emerging market realty
The revelation has come in the backdrop of astocks, appears to be mostly driven by the
seven-year bull run in the global propertyChinese stocks with top five global gainers
stocks coming to an end in the second quarterfor  the  quarter  coming  from  China.
of 2007, although emerging markets bucked the
trend, according to second-quarter review ofGlobally, property stocks fell by 4.5 per
property sector by international investmentcent on an average in the quarter as measured
services  firm  Standard  &  Poor's.by the S&P Citigroup Global Property Index
with sharp falls being registered by the
A comparison of price to earnings ratio ofstocks from the US, Europe and other North
stocks from various countries showed thatAmerican  markets.
valuation of property stocks from the US and
UK moved lower, while those from emergingHowever, emerging market stocks delivered a
market  continued  to  grow.positive return of 19.4 per cent in the
quarter and 26.7 per cent since the beginning
P/E ratio is considered as valuationof 2007. On a one-year basis too, the
benchmark of a stock where a higher ratioemerging markets crossed the global average
indicates an expensive stock while lower P/Eof 27.8 per cent by a wide margin,
signifies  a  cheaper  stock.registering  a  gain  of  90.6  per  cent.
P/E ratio for Indian stocks for the trailingTop five performers were Medinet Nasr Housing
12 months was highest among all countries,from Egypt, China Vanke Co, Beijing North
while return on equity (ROE) was secondStar Co and Shg Lujazui from China, besides
lowest among all emerging markets and lowerAmata  Corp  from  Thailand.
than  most  of  the  developed  markets.
"A prolonged seven-year stretch of continuous
The S&P study put the last 12-month P/E forgains, leading to excessive valuations,
Indian stocks at 209.30, against just 29.69decreasing yields and a legitimate desire for
in China, 39.90 for the US and 3.18 for theprofit taking caused a sell off in the
UK. On ROE front, Indian stocks gave a 7.15sector," Standard & Poors Index Services Vice
per cent return, lower than the globalPresident  Alka  Banerjee  said.
average  of  7.3  per  cent.
She said that after such a bull run, global
While India's ROE was higher than that of theproperty and REIT stocks finally gave back
US (6.2 per cent) and the UK (3.05 per cent),some of the returns that have made them such
it was the second lowest among emergingan attractive investment in the last few
markets  after  Turkey's  4.2  per  cent.years.
Besides, ROEs were more than 20 per cent forREIT indices for Europe, US and the rest of
stocks from markets like Denmark, Egypt,the world fell, while Asia was the only
Israel  and  Poland.market to post a gain with a modest rise of
two per cent, she said, adding that UK REITs
It was over 10 per cent for markets likeperformed dismally.



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