Realty Sectors Cured of All its Ills

Realty sector has performed well intraday on Thursday, recovered from the previous gloom as the chart shows. Considering the values of the gone month and the week, we can see that this sector was dipped in red, just to show a marginal rise on today’s trading session.

SLSymbol1D1W1M3M6M1YMove post Budget1NIFTY AUTO INDEX0.73-3.564.8616.0730.8029.8740.772BANK NIFTY0.60-2.494.9911.1129.9018.9344.363NIFTY FINANCE INDEX0.14-2.803.8312.7928.8819.0041.074NIFTY FMCG INDEX0.16-3.71-0.326.5416.6713.4421.965NIFTY IT INDEX-0.690.61-7.79-8.68-3.98-10.69-1.536NIFTY MEDIA INDEX1.11-3.571.7510.0725.6322.0330.437NIFTY METAL INDEX0.44-6.15-0.5417.8534.9740.8853.208NIFTY ENERGY INDEX0.27-0.631.1310.8216.7624.9823.699NIFTY PHARMA INDEX0.15-2.482.457.882.78-6.724.2710NIFTY REALTY INDEX0.02-4.36-2.399.5037.0421.7556.8411NIFTY0.13-2.520.636.3416.9711.4624.14

Certain stocks under this sector gained momentum. Indiabulls Real Estate, Unitech, Delta Corp, Oberoi Realty, HDIL, Phoenix Mills displayed positivity while Godrej Properties, DLF, Sobha gave negative returns intraday on Thursday. Amongst all the stocks, Indiabulls real estate share price quoted above 4% to settle at Rs. 88.45 while Prestige share price rallied down 6%.

SLSymbol1D1W1M3M6M1YMove post Budget1INDIABULLS REAL ESTATE3.48-2.19-0.29-11.4058.3233.1882.942UNITECH2.54-3.20-1.6323.4714.150.8357.143DELTA CORP1.957.1325.0886.59155.16102.61209.124OBEROI REALTY1.460.930.987.0622.2824.2932.905HDIL1.33-9.48-5.44-5.2028.9049.0251.876PHOENIX MILLS0.25-3.635.2529.2927.0126.3966.677GODREJ PROPERTIES-0.01-3.92-4.821.3323.627.9124.918DLF-0.65-7.82-11.168.8536.7917.3065.569Sobha-2.91-2.08-3.01-5.0315.428.4626.4010Prestige-5.68-8.05-2.844.3837.46-9.5723.97Latest happenings

Realty sector has approximately Rs 1 lakh crore under arbitration and relief ushered with the by the latest policy package formulated by the Indian Government. In this way the cash trapped realty sector is going to be revived and boosted. By implementing a mechanism to release the funds which are stuck in arbitration, the desired will be achieved implying a significant step for the industry and the economy.

The new norms devised reads that 75 % of the amount against guarantee will be released in such cases where a given award has been contested by government authorities.

Recently, the robust economic growth, one of the key factors of which is Foreign Direct Investment (FDI) has benefitted the Indian real estate sector. With time, the government has taken measures to encourage the flow of foreign funds into this sector by drafting a favorable policy regime and a strong business environment. As of now, the real estate sector contributes to 6% of the GDP.

Also, the festive season has brought back smiles on the faces of realtors. The stagnant real estate sector has seen a ray of hope in festive purchases. Demand for real estate properties from end users have picked pace and are anticipated to improve further. Festive season is the apex period for real estate since this period is considered promising for purchasing homes, valuables and making new deals.

Future Prospects

The Indian real estate market is anticipated to touch US$ 180 billion by the year 2020. The housing sector alone adds 5-6 per cent to the country’s GDP (Gross Domestic Product).

In the period FY08-20, the market size of this sector might grow at a Compound Annual Growth Rate (CAGR) of 11.2 per cent. Retail, hospitality and commercial real estate have also shown significant growth, providing the much-needed infrastructure for India’s growing needs. PE (Private Equity) investments from foreign funds in the Indian realty market rose at a Compound Annual Growth Rate (CAGR) of 33 per cent to US$2,220 million in year ending December 2015. Deal sizes increased too in 2015, and both luxury and affordable residential projects have attracted a considerable amount of capital. PE funds and Non-Banking Financial Companies (NBFCs) in India are seen to increase their investment in real estate projects, just to hedge risk and undertake bigger transactions.

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