Valuation rules for property firms on the basis of land banks are changing, reports CNBC-TV18. Emaar MGF, despite having a larger land bank than DLF, has been valued far lower.

In March, Sebi issued guidelines on disclosure norms for real estate companies. It said the market value of a land bank must be based on the current market valuation and there must be no future projection. Emaar MGF, one of the first developers to file its red herring prospectus with Sebi after the regulator's new rules, claims to have a land bank of 12,544 acres, almost 25% more than the 10,255 acres that DLF had when it went to the market.

But Emaar MGF, which expects to raise USD 1.5 billion, has a valuation that's over 4 times lower than DLF's. That's because its merchant bankers have given it a conservative valuation based on Sebi's norms.

Enam Securities says Emaar MGF's land bank is valued at Rs 26,896 crore after deducting unpaid land cost, construction cost, cost of land conversion and sales tax. But DLF's valuation was between Rs 81,000 and Rs 85,000 crore after deducting a developer profit of 20%.

However, this valuation was based on future projection of land considering the project planned on it and the income to be realised from it. Interestingly, both developers have most of their landholdings in NCR.

Sebi wants the method of projected valuations done away with and recent realty IPOs seem to be following the conservative approach. While retail investors may be able to make investment decisions without any risks involved, merchant bankers and consultants feel projected valuations will still be used by institutional and private equity investors to realize the worth of a property company.