Real estate stocks have been in the limelight as analysts pin hopes of a pickup in the sector in view of the upcoming festive season. Experts say low interest rates around the globe and a recovery in demand for housing are likely to support the property market going forward.
Lower interest rates across the globe to support economies against the pandemic remains a key positive for real estate.
In an exclusive interaction with CNBC-TV18, veteran investor Mark Mobius, whose firm Mobius Capital Partners remains bullish on India, believes the current boom in global realty can be attributed to low interest rates. "We are not in real estate due to leverage," he said.
A realty boom has been witnessed in the US and China, but investors need to be very careful at the current home prices globally, he warned.
Some experts say the real estate sector has consolidated for the past many years and looks due for growth.
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Veteran fund manager Madhusudan Kela believes India is still in early deals of a bull market as far as real estate is concerned.
"Even though stock prices have gone up a lot from the lows. If you look at the real estate sector, nothing has really happened in the past 10-15 years," said Kela, Founder of MK Ventures, told CNBC-TV18.
Giving a personal example, Kela said the house that he had sold in 2008 still quoted at the same price till about two months ago. "So in 13 years, the prices have gone nowhere in most pockets of India,” he said.
Though there has been no fundamental change for the sector in the recent past, optimism on the festive season has risen on Dalal Street.
A surge in Godrej Properties last week lifted its listed peers too after the developer said it had sold residential property worth Rs 575 crore in a single day at its luxury project in Noida.
According to Keki Mistry, CEO of mortgage lender HDFC, housing in the country is the most affordable in the past 20 years, as prices have not risen in the last few years. "A significant portion of housing demand is from first time buyers," he told CNBC-TV18.
Mistry is of the view that structural demand for housing will always remain strong in the country. He sees a huge scope for strong housing demand in the coming years.
Investors' optimism on the sector is reflected in NSE's realty index, which has scaled a series of peaks in the recent past. The Nifty Realty index tracking stocks of 10 realty developers including Godrej Properties, DLF, Sunteck and Oberoi Realty.
Market veteran Nilesh Shah remains positive on realty stocks. Shah of Kotak Mahindra AMC sees low interest Rates and low inventory levels as "clear positives" for the sector.
| Stock | Return in one month (%) | Return in three months (%) | Return in six months (%) |
| Godrej Properties | 55.1 | 63.1 | 67.2 |
| Prestige Estate | 40.6 | 72.5 | 60.5 |
| Brigade | 40.2 | 47.4 | 56.3 |
| Oberoi | 39.9 | 57.1 | 70.4 |
| Sunteck | 39.7 | 65.9 | 70.5 |
| DLF | 34.7 | 42.9 | 50.4 |
Sobha | 33.2 | 73.5 | 80 |
| Phenix Mills | 14.9 | 20.7 | 26 |
| Hemisphere Properties | 13 | -0.3 | 2.7 |
| Indiabulls Real Estate | 11.4 | 29.8 | 81.4 |
In the past one month alone, all 10 members of the index have given returns to the tune of 11-55 percent.
Murtuza Arsiwalla of Kotak Institutional Equities feels it is tough to find value in realty stocks now.
(Edited by : Aditi Gautam)
First Published: Sept 27, 2021 5:09 PM IST
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