Statement: A combination of factors have seen the sales volume of the top 25 listed real estate companies almost halve to about 11.8 million square feet in the quarter ended September 2013. It was 20.73 million square feet in the year ago period.
Which of the following may be a probable reason for the' slump in the real estate business ?

Options

A. Housing is not a problem in India now-a-days and every family has got a dwelling unit.
B. The real estate companies have increased the profit margin and hence sales have come down.
C. High cost of funds have dried up liquidity for the cash starved companies, which in turn log jammed the construction activity across India.
D. Residential and commercial units are being developed at the faster pace in comparison to actual demand.

Answer

C

Explanation

Increase in material and labour cost is the main reason for slump in the real estate business which has affected net margin severly and higher interest rates have affected cost of funds adversly.