A leading brokerage says it is "positively surprised" by the recovery in pre-sales in the real estate, has picked out some of its key names for potential stock upside.
"We are positively surprised by the pre-sales recovery momentum building up in the sector post the unlocks,", said an HDFC Securities report.
It added that while the market is expecting a slow recovery in the real estate sector, the brokerage's channel checks suggested an accelerated recovery is taking place, at least for the organised developers.
"Mixed-use players will outperform as compared to pure-plays, with office segment least affected followed by residential, retail and hospitality," said the note by HDFC Securities.
HDFC Securities' top sectoral bets are DLF, Brigade Enterprises, Phoenix Mills and Prestige Estates.
It added that the recent stamp duty cut in MMR will trigger deal closures in the region.
Therefore, the completed projects will be sold out soon followed by under-construction projects. For instance, Sobha recently reported pre-sales at 88 percent of pre-COVID levels, the broker pointed out.
Sobha has risen about 16 percent in the last seven sessions.
Office sales continue to see strong collections
Realty players are bullish about the office segment and expect at least 28-30 million sq ft commercial space absorption this year. "There will be a demand bounce back. Currently, things are moving slow but maybe next year, we will see the momentum picking up," Mindspace Business Parks REIT CEO Vinod Rohira said during a virtual real estate summit organised by CII.
According to HDFC Securities, the office segment continues to see strong collections of 95-98 percent but clarity is awaited on how ‘work from home’ will impact overall office demand and vacancy. The pricing in the near term is expected to remain soft as owners try to retain tenants.
Mortgage rates at all-time low
"The underlying low-interest rates and loss of confidence on unorganised players are aiding pre-sales of our coverage universe. Demand will continue to
consolidate to a few players in each micro market. Strong brand positioning, 5-
15 percent discount and lowest decadal mortgage rate shall aid residential recovery," said the brokerage report.
Cash flow management will be crucial; land acquisition/commercial capex will get deferred, it further added.
(Edited by : Nazim)