The National Housing Bank formally launched the NHB Residex last week to monitor residential property prices and evaluate the house wealth in the cities of Bangalore, Delhi, Kolkata, Mumbai and Bhopal. The Finance Minister P. Chidambaram launched the pilot project of the NHB in pursuance of the Government’s policy to bring about transparency in Indian real estate.

The official housing price index can be used by banks and housing finance companies to evaluate the portfolios and the collateral security while disbursing housing loans. The NHB Residex will be extended to 35 more cities and towns with a million-plus population in the second phase of the programme.

The index will be refreshed every 6 months, and would eventually cover all the 63 cities covered by the Jawaharlal Nehru National Urban Renewal Mission. At the same time, the Bombay Stock Exchange also launched its realty index last Tuesday, opening at Rs.7353.81.

The 11 stocks that comprise the index have a total market capitalization of Rs.1.78 trillion, or 4% of BSE’s total market capitalization. Worldwide, the realty stocks constitute 15% of the total market cap. Of the 11 realty stocks, DLF and Unitech dominate the realty index forming 67% of the market capitalization.

This has led leading real estate consultants to doubt the index’s ability to reflect the true picture of the Indian real estate market, as both these developers are based in North India.

Indiabulls, Akruti Nirman, Ansals API, Mahindra Gesco, Parsvnath, Peninsula Land, Phoenix Mills and Sobha Developers are others comprising the index.

Companies owning large land banks like Reliance and Bombay Dyeing have been ignored, as have construction giants Larsen and Toubro.

Realty experts opine that the regional index should be more representative of real estate prices across the country in all the segments of the industry.

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