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Investing in Real Estate Stocks

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Investing in Real Estate Stocks

Last updated: October 24 2016
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  • Investing in Real Estate Stocks

    This thread I have started to explore whether RE stocks are worth investing currently or during a fall or better to be a trader in RE stocks instead of an investor and members kindly share their views . My personal views is that RE stocks are good for short term trading rather than long term investing .Others may share their views .
  • #2

    #2

    Re : Investing in Real Estate Stocks

    Note : Sharing this article as a form of information and education and members are advised to do their own independent analysis before investing in any of these stocks .

    Real estate may rebound in 2016; top 5 realty stocks that could give good returns

    During 2015, the BSE Real Estate index wiped off the gains of 2014 as the index plunged nearly 14 per cent to 1,344 on December 31 from 1,555 on December 31 last year.
    By: Rahul Oberoi | Updated: January 6, 2016 1:09 PM
    http://www.financialexpress.com/mark...n-2016/188885/

    Low investment demand affected the stocks of real estate companies in 2015. During the year, the BSE Real Estate index wiped off the gains of 2014 as the index plunged nearly 14 per cent to 1,344 on December 31 from 1,555 on December 31 last year. The index gained 8.5 per cent in the previous calendar year.
    Among the real estate majors, the share price of Unitech retreated the most — 60 per cent in the previous 12 months, followed by Sobha Ltd (down 36 per cent), DB Realty (down 20 per cent), Prestige Estate Projects (down 19 per cent) and DLF (down 15 per cent). On the other hand, Godrej Properties gained 32 per cent during the previous calendar year. Other gainers include National Building Construction Corporation (up 21 per cent), Housing Development & Infrastructure (up 14 per cent) and Omaxe (up 8 per cent).
    Jimeet Modi, chief executive officer, SAMCO Securities said, “On account of unaffordable prices coupled with high interest rates and low rental yields, people continued to avoid real estate as an investment in 2015. That was the reason for lethargic activities and subdued prices in the realty sector.”
    There has been key policy related progress in the real estate sector like the Cabinet approval of the Real Estate Bill and rationalisation of tax structure for REIT listings in 2015. According to market experts, these steps should bring back transparency in the sector, thereby bringing back consumer and investor confidence in the long run.
    Ajay Jain, executive director, real estate group, Centrum Capital, said, “Regulatory bill will boost confidence among the prospective buyers. We may also see some consolidation between unorganized and organized players in the industry. Relaxation of FDI and ECB norms should boost real estate investment during 2016 since it provides exit avenues. Affordable housing will still play a pivotal role with sustainable demand from this space.”
    According to ICICIdirect.com, elevated property prices are making real estate unaffordable. Low investment demand, due to muted returns over the last one year, is also a dampener for real estate sector.
    Experts believe there might be a pickup of sales in the affordable housing segment in 2016 due to softening of interest rates. The high end segments will take time to recover.
    Modi of SAMCO Securities said, “Some cities will see tremendous growth due to increase in urbanisation and industrialisation coupled with the government’s smart cities initiative. So one has to be city specific to take a well-informed call. However, it looks like that the worst for the sector in terms of liquidity is behind and going forward as the prices correct demand will emanate which will help in reducing the inventories and generate liquidity for the sector.”
    Jain of Centrum Capital, said, “In 2016, we expect demand to pick up in Bangalore and Mumbai Metropolitan Region (MMR). Also, commercial projects have not been doing very well in the past few years. With very few inventory left of commercial units, we expect the demand to go up in 2016. Further, people have already begun looking at markets like Hyderabad and Kolkata which were not doing well in the last year. However, we expect the pressure to continue in Noida, Navi Mumbai and Ahmedabad.”
    If you are planning to invest in real estate stock in 2016 then you should prefer a company with fair past execution track record, strong balance sheet, regional spread, quality land bank and a company with ability to generate strong cash flows.
    With the help of brokerage houses, we list 5 top realty stocks that could give good returns in 2016.
    Oberoi Realty
    Recommended By: HDFC Securities
    Why Buy: Oberoi Realty delivered strong pre-sales volume with big launches. While investors were concerned that the Mulund and Borivali projects would see a muted response owing to weak real estate macros, the company surprised with robust sales. Within a month, around 70 per cent of the launch area was sold vs. around 50 per cent for the Goregaon/JVLR projects (achieved over FY10-12). High land bank quality, superior brand recall and healthy access to finance put Oberoi Realty in the top quartile vs Western peers. The share price of the realty major can touch Rs 411.
    Mahindra Lifespace
    Recommended By: ICICIdirect.com
    Why Buy: The brokerage house prefers players who have quality management execution bandwidth and relative strength in the balance sheet. ICICIdirect is positive on Mahindra Lifespace and Oberoi Realty in the sector.
    Godrej Properties
    Recommended By: SAMCO Securities
    Why Buy: Godrej Properties is efficient growth oriented company with manageable debts having diversified portfolio across top cities in India. The company works on asset light model which generates superior returns for the shareholders.
    Sobha Ltd
    Recommended By: SAMCO Securities
    Why Buy: Sobha, a south based developer, is growing consistently inspite of sluggishness in the realty sector. The company has reasonable debts with asset light model operating in south based cities. The company has generated superior return on equity (ROE) of 10 per cent even in sluggish demand phase which gives an indications that during good times the results will exceed expectations.
    DLF
    Recommended By: SAMCO Securities
    Why Buy: DLF is a large player having pan India presence in residential, commercial and hospitality segment. The company has slowly reduced its debt to manageable levels by exiting non-core assets. DLF has managed to generate profits while its other large peers are still struggling. The company has good execution capabilities to deliver large projects with little costs over runs. When the economic growth picks up, the company will be able to generate capital appreciation for its shareholders.
    Disclaimer: The stocks are recommended by the respective brokerage houses and not a recommendation from Financial Express online.

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    • #3

      #3

      Re : Investing in Real Estate Stocks


      Real Estate Stocks Back In Vogue?
      http://www.bloombergquint.com/charts...k-in-vogue2:59 PM 10/24/2016
      Sagar Salvi
      October 10, 2016, 6:29 pm

      Indian real estate stocks have shown signs of resilience in recent times, with the sectoral index outperforming the Sensex on more than one occasion.
      In the first nine months of this year, the S&P BSE Realty index gained around 15.6 percent compared to a 7.6 percent rise on the Sensex. The local real estate gauge also managed to beat the MSCI Emerging Market Real Estate index, which climbed 3.1 percent, year-to-date.
      Stocks that have done well during this period include the likes of Indiabulls Real Estate (+34 percent), NBCC India (+32.2 percent), DLF (+32.7 percent) and Omaxe (+27 percent).
      So what's caught investor fancy?
      Analysts say a combination of reform-based initiatives by the government, like the Real Estate Bill passed in March, and prospects of easing interest rate has stoked investor appetite for real estate shares.
      Since the Reserve Bank of India reduced key interest rates last week, the real estate index climbed just over 4 percent, against a rise of 0.7 percent on the Sensex.

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