Realty Estate Stock Tips: Due to the low home loan rates and the festive season, there is a possibility of a boom in home purchases. Its indirect effect is also visible on the share price of real estate companies. The BSE Real Estate Index has recovered from the level to which it had slipped in March 2020 last year and has now jumped up to 140 per cent. Talking about realty stocks, Sobha has given a bumper return of up to 524 percent to investors since March 2020. The share price of Sobha had fallen on 27 March 2020 at a price of Rs 130.95, which was closed on 6 September 2021 at Rs 817.30 i.e. the investment increased by 524.13 percent.
The demand for homes is increasing from almost every segment i.e. from affordable and mid income to luxury and super luxury. Due to this, market analysts are positive about the recovery in the realty sector and in this positivity, cheaper home loans and festive season are playing a major role in it. In such a situation, experts believe that investors can get better returns by investing in realty stocks. Given below is a table where you can see how realty stocks have given investors bumper returns in the last 17 months.
For this reason the realty sector got support
- Most of the industries, including the realty sector, were badly affected due to the Corona epidemic. However, the central and state governments tried to give relief by exempting stamp duty, cutting charges. Apart from this, with the formation of Special Window for Affordable and Mid Income Housing (SWAMIH), the problems of funding the pending projects were also removed.
- Policy rates were kept low, which helped the realty sector in the difficult times of the pandemic. After the success of the vaccination drive, it is being speculated that the relief from the Reserve Bank (RBI) and the governments in the current financial year will prove to be helpful in reviving this sector.
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Realty companies’ profits up over 100% in FY21
The net profit of the major realty companies included in the BSE Real Estate Index grew more than 100 percent in FY21. The profit of these companies increased to Rs 3143 crore in FY 2021 as compared to Rs 1528 crore in FY 2020. There was a 27 percent decline in the total sales of these companies and there was a net sales of 23 thousand crores in the financial year 2020-21. Talking about different companies, DLF had a net loss of Rs 583 crore in the financial year 2019-20, while it has made a profit of Rs 5145 crore in the financial year 2020-21. Net profit of Prestige Estate Projects rose 261 per cent to Rs 739 crore and that of Oberoi Realty was up 7 per cent to Rs 1456 crore. However, Sobha’s net profit declined by 78 per cent year-on-year, Suntec Realty 43 per cent and The Phoenix Mills 84 per cent.
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Demand expected to reach 2019 levels in two years
- According to the annual report of DLF, now the demand is increasing in every segment, from affordable homes to luxury homes. Apart from this, DLF may offer new products in the next few quarters.
- According to market experts, consolidation is increasing in the residential market and due to this the market share of listed companies has increased from 17 per cent a decade ago to 35 per cent.
- Unlisted companies may find it difficult to bring in new projects due to weak launch pipeline and lack of capital. There the top 10 listed players can further increase their stake in the big cities of the country.
- Godrej Properties, Oberoi Realty, Sobha and Brigade have great projects to launch in the next two years.
- The demand for residential real estate is expected to reach 2019 levels in the next two years.
There is apprehension about the third wave of Corona
Investors should keep an eye on Corona cases in the country. The realty sector is recovering from the shock of the epidemic, but its efforts may be hit by the third wave of Corona. However, if there is a decline in the active cases of corona and the threat of the virus is reduced, then the real estate sector can show better growth in the coming days.
(Input: Angel One)