Brick and mortar is slowly emerging from the shadow of the virtual chandelier, as cuts in stamp duties and funding rates by major lenders such as HDFC, Kotak Mahindra and State Bank of India fuel a rally in real estate stocks.
Godrej Properties, Oberoi, Puravankara and DLF rose more than 10% on Thursday, while the Nifty Realty index jumped 9%.
Karnataka reduced its stamp duty to 3% from 5% on properties below Rs 45 lakh earlier this week. Meanwhile, Mumbai is expected to see 7,000 property registrations in September, according to estimates provided by Motilal Oswal. Mortgage rates offered by most major lenders are between 6.5% and 7.0% for 20-year home loans and are the lowest on record since 2005.
While initial expectations were for new residential launches to start from October 2021 to coincide with the start of the holiday season, the decline of the second wave of Covid, record mortgage rates and strong hiring with growing Wages in the IT / IT sector led developers to push forward new housing starts in August-September.
“We expect real estate demand momentum to continue in the December quarter with the Dussehra and Diwali festivals and expect developers to post a record number of sales bookings in the second half of FY22 thanks to new launches, “said Adhidev Chattopadhyay, analyst, ICICI Securities. “We estimate that the Pan-Indian residential market share will grow from 25% in FY 21 to 29% in FY 24, and DLF, Oberoi Realty, Brigade Enterprises, Sunteck Realty and Mahindra Lifespaces are our best choices. ”
On a global basis, the top 10 listed Indian developers reduced their consolidated net debt by 37% to 27,400 crore between the quarters of March 2020 and June 2021. This was achieved through a combination of reducing the cost of debt by 80-160 basis points, 20-40% reduction in corporate overheads from pre-Covid levels, operating cash surpluses, asset sales and equity increases either through qualified institutional placement, either by dilution at the level of the SPV (special purpose vehicle).
Shares of Godrej Properties rose 34% last week, while DLF and Sunteck Realty gained 17% and 11% respectively. The Indian real estate market is regaining the confidence of even global institutional investors, and they see good opportunities in equity and debt investments.
âResidential is experiencing a significant recovery in all markets thanks to favorable government policies, pent-up demand for 18 months, attractive prices and lowest mortgage costs on record,â said Sharad Agrawal, Executive Director – Capital Markets, Knight Frank India. “Investor interest in retail is also returning, as spaces have reopened completely in most markets and people have started to assess opportunities in this space again.”