Realty stocks buzzing: Affordable segment demand, PE investment key drivers

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The real estate stocks have been buzzing following their first-quarter updates which show a big year-on-year improvement. The Nifty Realty index is outperforming the benchmarks rallying over 3.5 percent at the time of publishing this copy. In the past month, the index is up seven percent while in the last six months it has rallied over 12 percent versus Nifty seeing an eight percent rise. To discuss the outlook as India recovers from the second COVID wave, CNBC-TV18 spoke to Abhishek Kapoor the COO of residential at Puravankara, Anshuman Magazine, the Chairman & Managing director at CBRE South Asia and Gulam Zia, the Executive Director at Knight Frank.

The real estate stocks have been buzzing following their first-quarter updates which show a big year-on-year improvement. The Nifty Realty index is outperforming the benchmarks rallying over 3.5 percent at the time of publishing this copy. In the past month, the index is up seven percent while in the last six months it has rallied over 12 percent versus Nifty seeing an eight percent rise.
To discuss the outlook as India recovers from the second COVID wave, CNBC-TV18 spoke to Abhishek Kapoor the COO of residential at Puravankara, Anshuman Magazine, the Chairman & Managing director at CBRE South Asia and Gulam Zia, the Executive Director at Knight Frank.
While the last quarter was tough because of multiple lockdowns, private equity investment inflows into the Indian real estate sector stood at USD2.7 billion (INR143 billion) during first half of 2021 according to the latest report by Savills India, a global property consultancy firm. This inflow is equivalent to 41 percent of the investment that the sector saw in the entire year of 2020, an indication that investors’ confidence remains intact.
"We have seen a continued flow of enquiries and transaction closing. We definitely have seen significant uptake in site visits and transaction closures in the month of July. We believe that we are really bouncing back and I think this quarter itself you will start seeing much better numbers from the previous quarter,” said Abhishek Kapoor.
The sector has seen demand mostly in the affordable segment but now luxury is also coming up in spots.
"You can’t take a general view of all the markets so we would see for example in Mumbai certain spots where the luxury has done well. But it could be in parts of some other city have not done well,” said Anshuman Magazine.
One of the main reasons for the boost to the affordable segment is low interest rates.
“In Mumbai for the month of June closing the quarter, we saw over 8,000 apartment sold which if the rest of the year goes it that way then we would actually break the numbers what we did the pre-COVID first wave," said Gulam Zia of Knight Frank.
It should be noted that in Mumbai a below Rs 1 crore property is termed affordable.
"Below Rs 1 crore numbers used to hover between 45-50 percent share of the overall transaction, but in last three months - April, May and June - this number has gone up. Affordable market at least in the month of April was almost two-third of the overall market which means from 50 percent to 75 percent and then gradually it is coming down but still hovering around 60 percent which is definitely higher,” said Zia.
For the full discussion, watch the accompanying video

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NTPC116.70 -2.05 -1.73
CompanyPriceChng%Chng
Kotak Mahindra1,652.85 -45.10 -2.66
Cipla889.90 -23.20 -2.54
Tata Motors284.45 -6.95 -2.39
Dr Reddys Labs4,731.75 -111.60 -2.30
M&M728.70 -16.85 -2.26
CompanyPriceChng%Chng
Kotak Mahindra1,653.20 -44.75 -2.64
Dr Reddys Labs4,730.20 -114.15 -2.36
M&M728.45 -16.95 -2.27
Power Grid Corp228.05 -4.05 -1.74
NTPC116.70 -2.05 -1.73

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