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Mumbai: Shares of real estate developers with mixed exposure to commercial real estate and affordable housing projects are expected to outperform their peers given the robust demand for both offices and compact homes.
However, concerns over sluggish housing sales and ongoing liquidity squeeze are likely to keep shares of residential property developers with languishing over the near to medium term, experts said.
“Shares of developers with commercial and affordable housing project will bounce back faster as the demand continues to be good.
The preference is towards mix of all and not just one segment of the business,” said Pankaj Pandey, Head – Research, ICICIdirect-.com.
According to him, shares of residential projects developers will take around 2-3 years to see a major comeback from current levels.
On Thursday, BSE Realty Index registered a 9.5 per cent drop over previous close weighed by nearly 5-20 per cent decline in several real estate shares including Prestige Estates, DLF, Godrej Properties, Oberoi Realty and Phoenix Mills.
Decline in Phoenix Mills shares was also attributed to concerns over drop in footfalls in malls.
Over the past one year, shares of Phoenix Mills have risen 22.4 per cent even after factoring Thursday’s decline.
Residential real estate across India showed a 7 per cent year-on-year decline in sales at 125 million sq ft in the quarter ended December reflecting the slowdown.
New launches declined 15 per cent to 90 million sq ft resulting in all-India residential inventory of 1.27 billion sq ft as of December 2019, showed Kotak Institutional Equites report.
Kotak expects sales performance of listed realty developers to remain strong.
“Brigade among the coverage universe has had the most consistent growth profile while DLF benefited from a high quantum of sales at Ultima (project).
Sunteck will likely report better performance in the fourth quarter of FY20 owing to the launch of the next phase of their affordable housing project in Naigaon,” Kotak said.
