• OCTOBER 25, 2000

Sharp raiders chase property

From Bajoria and Bombay Dyeing to ITC and EI Hotels to Dalmia and GESCO, the recent spate of news and rumours on takeovers has had one underlying theme in common: the underlying asset is cheap. And that underlying asset is property. So all these raiders are betting on one thing: after their takeover, they will be able to unlock hidden golden value and reap a bonanza.

Well, that may not a sure bet. Anyone familiar with the trends in property prices knows that the crazy days of 1994 and 1995 are pretty much over. From Bangalore, to Mumbai, to Vadodara property projects are languishing and, despite a recent increase in prices in many areas, the underlying mood in property markets is anything but bullish. People are optimistic, people are hopeful, but not many are sure that prices are going to recover on a sustainable basis. Yet our raider barons have bet their raids on the future of property prices and their ability to sell the underlying holdings and convert illiquid land into liquid cash. Not that we wish to dampen their enthusiasm, but maybe they need to be a little more cognizant of the underlying reality.

Buying a company for its frozen assets means one wishes to un-freeze the stuff and that is easier said than done what with labor unions, land laws, and existing excess supply. If the raiders wanted property, maybe they could search the database of over 15,000 listed properties that exist on the site of our affiliated website, www.mymakaan.com. Suggestion: sell your shares to the raiders and move your sale proceeds into the properties listed on www.mymakaan.com.

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