The Indian real estate sector which has been badly hit by recent stock market crash and bad global cues, may be seeing some glimmer of hope for the first time in about a year, after two of its biggest names DLF Ltd. and Unitech managed to raise cash by way of equity sales in recent weeks. Promoters of India's largest real estate company DLF sold a 9.9% stake to raise Rs 3890 crore last week, while Unitech closed a QIP to investors raising Rs 1600 crore in April. The fund-raising by DLF promotors and Unitech shows the improvement in general sentiment towards real estate.

Unitech MD Mr. Ajay Chandra says that even now no company in the sector could possibly come out with an initial public offer for at least another year, although a couple more QIP's may get done. “There is a decent appetite for QIP's among investors.” he added.

According to some experts “recent successful transactions by DLF and Unitech do not necessarily signal a total revival of the sector”. As per them there was no overwhelming interest among investors for Indian real estate and recent two cases were more a case of smart money shifting from low yield bonds to high yield equities with the risk of bankruptcy having receded.

Investors are also cautioning against assuming a recovery for the sector, which was tipped into a downward spiral in Feb last after IPO of Emaar MGF failed to take place. The last 12 months has been painful for the sector as the prices kept plunging and access to funds dried up. A combination of high interest rates and high property rates kept buyers in wait and watch mood. Weak economic foresee forced corporates and retailers to freeze expansion plans, adding gloom to already desperate situation.

Borrowing costs zoomed and private equity dried up, leaving many realty firms that had piled up large amounts of debt to fund their land buying spree in boom years with little cash to service that. It was the Reserve Bank of India's decision to allow restructuring of commercial real estate debt that saved many companies from defaults and bankruptcy.

Not all companies will be as fortunate as DLF or Unitech. Small realty companies will struggle for funds. For those companies, the solution could come in the form of private equity, but when, that is the question. If we look at stock markets, some realty stocks that tumbled 70% to 80% from their peaks, have seen some recovery in past few months. For example DLF has more than doubled since February. Best hope for revival of real estate sector can be improved global situation, fall of interest rates and fresh risk appetite of investors.