Real Estate Stocks on High despite Dubai Fiasco

Domestic realty stocks that bore the brunt of heavy

 selling last week following the Dubai debt crisis have,

 in fact, outperformed the broader market in the past 

one week. The BSE realty index has give a return 9.57% 

during the period compared to the BSE Sensex gain of 

just 1.96%. Even on a monthly basis, realty stocks have

 generated a higher return of 15.30% to Sensex gain of 11.56%.

Experts feel that the sentiment towards real estate sector

 has improved after lenders slashed their housing loan 

rates that are very positive for the industry. Further last four 

months of robust IIP numbers, along with better-than-expected

 GDP growth for the second quarter ending September 30,

 signifies the underlying strength in the domestic economy 

that augur well for the Indian real estate sector.

Shailesh Kanani, real estate analyst, Angel Stock Broking, 

said the main reason for realty stocks to go up is that the

 overall markets have gone up. “Moreover, bankers have

 reduced housing loan rates. HDFC has reduced housing loan 

rates to 8.5%, in line with SBI at 8.5%. This increases affordability

 and EMI goes down.” The DLF stock surged 8.37% or Rs 29.65 

in the past week, while the stock of Unitech gained 16.43% during the same period.

“Currently, the stock market is exuberant and the residential real 

estate sector has started to look up as customers have come back

 to the market. Realty stocks grow and dip in line with the growth

 and dip in economy,” said Ambar Maheshwari, head, investment 

advisory, DTZ International Property Advisers. 

He said, “We are projecting the GDP to grow over 7%, which 

comes at a time when there is lot of disposable income in the market

 followed with lot of investments. As a result, people are buying more

 houses and corporates too are doing well. Real estate is a horizontal 

sector and almost all other sectors are vertical sectors. Realty stocks 

grow on the back of all the other sectors.”

Anand Narayanan, residential director, Knight Frank India Private Ltd, 

said, “The growth story in real estate is that Indian housing sector is 

broadly 10% of the Indian population, which has access to grade 

A office space. Since listed real estate companies have taken equity

 to clean up their books, their stocks look positive. Real estate stocks

 are seen moving in tandem with what was observed during the 2007-08 fiscal.

 In terms of sales, both residential and commercial sales can be better in line with 2007-08.”

The domestic equity market ended the day on a flat note following profit 

booking in key index heavyweights. The Sensex ended the day at 17,185.68 points,

 up 15.77 points or 0.09%, while the Nifty ended the day at 5,131.70 points, 

up 0.16% or 8.45 points

Source: Indian Realty News