After years of sluggishness, opportunities are increasing in the real estate sector. With strong momentum, demand is being seen in all sectors especially residential space. Most of the companies have significantly reduced their inventory and new projects are being announced which is creating confidence in the sector. For a long time this sector was affected by various factors including demonetisation, GST, issues of corporate governance. Clients were losing their hard earned money in projects that were never completed due to mistakes made by many builders.
But slowly and steadily, this sector is moving forward, reversing the trends, removing these issues.
According to industry experts, there are a few reasons for the improving demand in this sector. A report by HDFC Securities said, “Upcycles are driven by rising income levels, rising rents and lowering interest rates, increasing market share by organized companies, wealth effects, disintegration of joint families and increased confidence in strong economic growth in the sector.” I am looking radiant.
According to a report by Kotak Institutional Equities, “Residential real estate across India witnessed sales of 195 million sq ft. This is the strongest quarterly sales in the last decade. It has grown by 17 per cent year-on-year”. The last best quarter was Q4FY11 with sales of 174 million sq ft in the sector.
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Kotak said in its report, “Home sales in NCR grew by 13 per cent year-on-year to Rs 7,530 per sq ft in Q3 FY22. Noida 4 per cent yoy, Greater Noida 5 per cent yoy And Ghaziabad has seen a growth of 8 percent on a yearly basis.”
New launches in the Mumbai Metropolitan Region (MMR) grew by 18 per cent to 22.1 million sq ft. Thane accounted for 52 per cent of the total new launch space while Mumbai accounted for 38 per cent.
“Prominent realty developers such as PEPL, Oberoi Realty, Sobha and Lodha are looking to expand the geographic footprint, while others such as DLF and Sunteck are building more homes,” said a report by Edelweiss Research.
Experts opine that the recent fall in realty stocks has made them attractive from a medium term perspective.
Kotak believes that massive sales improvement for the sector, increase in market share by organized developers and rising real estate prices bodes well for listed real estate developers.
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Kotak said in its report, “We believe that the Bengaluru-based company is in a better position to capitalize on the growth of the sector. We continue our picks on Prestige Estates, Brigade Enterprises and Sobha. With the likes of Mumbai-based companies Macrotech and Oberoi Realty. Shares also look attractive at current prices.”
Edelweiss has given preference to landowners like DLF and Sobha. He has given buy rating on both these stocks. After the improvement in this sector, Edelweiss has upgraded its rating on Godrej Properties by giving it a buy rating in view of the attractive valuation.
The top picks in the real estate sector for HDFC Securities are DLF, Oberoi, Phoenix Mills, Mahindra Lifespaces and Brigade Enterprises.
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