Tag: property market

Mahesh Nandurkar expects double-digit market returns over 12-24 months

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Mahesh Nandurkar, India Strategist at global investment firm Jefferies sees no reason to be pessimistic despite the market’s excellent run so far. Barring minor pullbacks, he expects strong double-digits returns over the next 12-24 months.

Nandurkar believes that foreign investors are currently staying away from Indian market on valuation concerns. However, over the next 18 months or so, they will gradually start returning.

“India is beginning to show up on the radar of a lot of global investors and rightfully so, because in about 3 years’ time India will be the third largest in terms of GDP….we are already the fourth or fifth largest in terms of market cap,” he noted in a discussion with CNBC-TV18.

Also Read | Raghuram Rajan says rich countries seeing India as a competitor due to job creation in service sector

Nandurkar sees large private banks as potential compounding stories. The real estate sector, he noted, is currently in its third year of an upcycle. He highlighted a unique aspect of realty stocks, explaining that they often respond to pre-sales, while developers typically follow the project completion method.

Also Read | Breaking the mold | Rajan and Lamba propose India’s shift to high-value manufacturing

Nandurkar pointed out the intriguing dynamics between green energy and traditional energy spaces. “We are looking at the power sector utilisation rates moving beyond 80%, something that we have never seen in the history of the power sector. So, there is going to be strong returns in the traditional energy side as well as the green side as well.”

For the entire interview, watch the accompanying video

Catch all the latest updates from the stock market here

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Brigade Enterprises says corporate decision delays impact SEZ property rentals

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Realty firm Brigade Enterprises on Friday (August 25) said the company is facing a unique challenge in its property portfolio. While the company has successfully leased out all its non-SEZ commercial properties, it grapples with a different reality within the confines of Special Economic Zones (SEZs).

In an exclusive interview with Atul Goyal, CFO of Brigade Enterprises, he acknowledges that SEZs across India have been grappling with sluggish demand, and the company currently holds approximately 1.2 million square feet of vacant space.

The uncertainty stemming from global economic factors, such as the talk of a looming recession in the United States, has left the company puzzled as to why businesses are delaying their decisions to rent within these SEZs, he said.

However, amidst these challenges, Brigade Enterprises is pinning its hopes on its existing clients, the majority of whom are Global Capability Centers (GCCs), and their expanding requirements. The company believes that this strong client base will drive demand and enable them to fill the vacant 1.2 million square feet of SEZ space over the next four quarters, Goyal added.

Brigade Enterprises’ primary commercial properties are located within special economic zones (SEZs), a sector facing challenges across India. The company possesses approximately 1.2 million square feet within these SEZs, and its projection is to achieve full occupancy over the next four quarters.

Below is the verbatim transcript of the interview:

Q: Give us a few details about the sales deed for acquiring around 6.5 acres of land in Chennai to develop a residential project, what is the cost of acquisition and give us some kind of details on the timeline of this launch, what kind of a project will be and sales potential?

A: It is a 6.5-acre land and it’s a corporate land, which we have bought, and it is on the main Old Mahabalipuram Road (OMR). We already have a big development there with GIC, which is a World Trade Centre in Chennai, and we also have a residential attached to it. So, it’s a very prime property. We have acquired it for Rs 145 crore and we expect around 1 million or so development there, which will be mainly on the residential side.

Q: A million square feet of saleable area at what price?

A: It’s difficult right now, but around 10,000 is a minimum by the time we launch, it should be much more so around gross development value (GDV) will be in the range of Rs 1,000 crore or so.

Q: Any more land buys that you are looking at, at the moment and what are the areas, and geographies that you are looking to buy land at, what is the corpus that you have outlined for this?

A: We are looking for land and as the sales are very good in residential. We recently bought, in an auction, in Hyderabad for 9.5 acres, which was for an overall Rs 660 crore. So, we are trying to take land more in Bengaluru, Chennai, and Hyderabad to spread our baskets so that everywhere we can do the launches. Right now, the maximum launches and sales are from Bengaluru. So, we are looking for land everywhere and trying to take good land. Overall, we should do around Rs 500 crore per year of land acquisition based on how the market demand is there and how the sales go ahead in coming quarters.

Q: You already have a 340-acre land parcel in Bengaluru currently. How much are you planning to grow it by and what is the pipeline for the next 6-12 months in terms of new launches?

A: In new launches, we are planning around 7.5 million or so. Yes, there has been some delay in approvals, but definitely we are targeting around 7 million or so launches, there can be some delays, because there are some launches from Chennai e as well. So, based on the approvals and the RERA approvals, we will try to launch that much. Of course, Bengaluru will always remain a mainstay for that company. We are doing more acquisitions in the form of joint development agreements (JDA) or in the form of acquisitions, but our prime focus today is Chennai and Hyderabad because we want to increase our focus in both cities. In Chennai already we have bought land for around 12.5 million. Hyderabad, we have started. So, the focus is on all three cities and Bengaluru will always be focused because it is a prime focus for the company.

Q: In all three cities, Chennai, Hyderabad, and Bengaluru, could you clearly tell us how much is the saleable area that you are sitting on at this point?

A: In Bengaluru, it is around 33.3 million. In Chennai, it is 12.5 million or so and the rest is others. Of course, now, Hyderabad will also get added to it which will be in the range of 3.5 billion of development in Hyderabad.

Q: There have been a lot of NRI investments in the real estate market. Are you observing that sort of a trend as well in your projects?

A: Yes, some NRI investments are definitely there, but I would not say that there has been an increased demand; yes, demand is there. Bengaluru is a market, people like to settle here because of the talent, that is there. So, demand has increased, but I will not say it to a very great extent.

Q: I (Sonia Shenoy) recently visited the city, and I realised that there is not only rapid urbanisation in Bengaluru happening right now, but there is also a big destruction of the green cover, which is, of course, another issue altogether. But I take your point that, you know, things are definitely picking up but that’s on the residential side. Right. Tell us a little bit about the commercial side of things. This time again the commercial demand was a bit on the weaker side. What is the occupancy like and what is the way forward for you?

A: For us, the main commercial demand, and the commercial properties, we have are in a special economic zone (SEZ). And, of course, SEZ has been struggling all over India. Non-SEZ, we do not have any vacancies, everything has been leased out. So, in SEZ, yes, there is an issue we have around 1.2 million and of course, the talk of recession in the US, which has never come. So, I don’t know how the companies have been delaying their decisions to rent in these SEZs. But, of course, we are looking for lots of demand from the existing clients because a maximum of our clients are global capability centres (GCC), and they are looking for good expansion and we should be able to fill this 1.2 million in the next four quarters.

Q: Can you give us the numbers? In FY23, your lease rentals were about Rs 750 crore odd where will it be like at the end of FY24? And you have about 8.5 million square feet of operating commercial portfolio? Do you plan to grow this further? Just those two numbers if you can help us with.

A: Rentals should go in the range of Rs 850-900 crore this year. That is what we estimated. And of course, for additions we have one project which is called Twin Towers, where we have 1.3 million square feet which will be completed next year. And definitely, it’s a non-SEZ. So that is the main lease area which we will be launching in the market. There are some 1.3 million developments in Whitefield also. So that is also coming up, but that will take time of at least two-and-a-half years to come up.

For more details, watch the accompanying video

Also, catch all the live updates on markets with CNBC-TV18.com’s blog

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Yardeni Research evaluates India as best investment destination, and Fed’s policy as balancing act

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Despite global economic uncertainties, India continues to showcase resilience and potential. According to Ed Yardeni, India still appears to possess several favorable factors that position it as an attractive investment destination. The country’s vast market, coupled with its entrepreneurial spirit and growing middle class, provides a solid foundation for sustained economic growth. Investors are keeping a keen eye on India’s progress, expecting lucrative opportunities to arise in sectors such as technology, manufacturing, and services.

In an interview with CNBC-TV18, Ed Yardeni, President of Yardeni Research said that India continues to emerge as a promising investment destination, with favourable factors driving its growth story, adding that China’s property market challenges warrant close attention due to potential repercussions.

He said, “There is a lot of pressure to put supply chains in areas of the world that are viewed as relatively stable and secure, and India certainly stands out in that regard. So, the geopolitical situation is favouring India with the rights to foreign investors. And I just don’t mean foreign investors in the stock market. I mean, direct investments people, companies investing in India.”

Also Read | Is online business the breakthrough awaited by India’s women entrepreneurs

In contrast to India’s positive outlook, China’s property market is grappling with significant challenges. Yardeni highlighted the ongoing troubles faced by the real estate sector in China. While the specifics of the issues may vary, it is no secret that the Chinese property market has experienced turbulence in recent times.

Talking about Fed’s balancing act, he said that as the US Federal Reserve navigates its monetary policy decisions, there is a delicate balance it must maintain. Yardeni believes the Fed is cautious about pushing the limits of what the market can withstand.

Also Read | A June pause in rate hikes would be a close call for Fed officials, minutes of last meeting show

“We are in restrictive territory with regards to the Fed funds rate as evidenced by the banking crisis. So, I have not given up on the notion that the Fed is going to pause for a while for a long while perhaps, and that we may not get further rate increases this year,” he added.

For more details, watch the accompanying video

Also, catch all the live updates on markets with CNBC-TV18.com’s blog

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

This real estate developer eyes Rs 10,000 crore in full-year bookings with a pickup in property demand

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Godrej Properties — one of the country’s largest real estate developers — expects to secure Rs 10,000 crore in bookings within the year ending March 2023, the first half of which saw a jump of about 60 percent. Pirojsha Godrej, Executive Chairman at Godrej Properties, told CNBC-TV18 that the management expects the second half of the current financial year to be much stronger sequentially “as usually the case is”.

Its bookings in the April-September period reached almost Rs 5,000 crore, in line with its full-year guidance of Rs 10,000 crore, he said. “We are well set to achieve that and hopefully exceed. (I am) feeling very good about the financial year as a whole.”

If achieved, the value of sales bookings would have increased by 27 percent compared with the previous year.

His remarks follow close on the heels of the property developer reporting a 54.5 percent year-on-year jump in net profit for the July-September period to Rs 55 crore. Its revenue expanded 27.6 percent to Rs 165 crore.

Godrej said the company aims to have a lineup of projects worth a gross developable value — which means the estimated value of a proposed project — a minimum Rs 15,000 crore for the full year.

“It’s a very important year for business development,” he added. 

The company achieved significant growth in collections in the July-September, with operating cash flows from being just above break even in the three months to June 2022 to about Rs 720 crore in the following quarter,” he said. “I think operations were reasonably strong,” Godrej added.

The property major’s ambitious plans come about at a time when many experts believe real estate is in for a multi-year upcycle. Major central banks around the globe are raising benchmark interest rates to tame red-hot inflation.

Godrej hinted at more price hikes in the the company over the next 3-4 years. “We have seen some price increases, but so far it has been more to pass on the kind of inflationary activity that has been evident,” he added.

Godrej Properties shares have gained a little more than one percent in the past one month, a period in which the Nifty benchmark has risen about five percent.

Catch highlights of the Nov 10 session with CNBCTV18.com’s blog

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

What key rate cuts in China mean for India

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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At a time when major central banks are raising interest rates to tackle red-hot inflation, China is actually lowering them. The recent policy action by the People’s Bank of China — which has lowered the rate twice already so far this year — is aimed at aiding an economic revival amid a real estate crisis and a resurgence of COVID infections.

“The markets are looking at China as a serious slowdown risk. Disappointing macro demand data readings are somewhat dispelling the notion that China is in the middle of a significant reopening rebound,” Madhavi Arora, Lead Economist at Emkay Global Financial Services, told CNBCTV18.com.

Why is China easing the rates?

Easing of interest rates is expected to support China’s property market, which is facing a slump in sales with developers burdened under piles of debt. Last year, a default on debt repayments by Evergrande and other major developers in the country had fuelled fears of a contagion effect sending the global economy into a crisis.

The country’s central bank has taken out some cash from its banking system in a bid to revive credit demand.

What does it mean for the global financial markets, especially India?

The surprising policy action from the world’s second largest economy comes at a time when investors around the world are already concerned about a global slowdown, following two back-to-back quarters of GDP contraction — also known as a technical recession — in the US.

China’s central bank lowered its loan prime rate, a target for market rates, after a crackdown on debt caused a real estate slump in the country on account of pandemic-related lockdowns.

Analysts say China’s rate action reflects the seriousness of weakness in its real estate market and sets the alarm bells ringing for major economies around the globe.

“China’s surprise rate cuts when the rest of the world is hiking rates is a reflection of a sharp slowdown in the economy. The Chinese slowdown along with the sharp slowdown in Europe will impact global growth this year and this is bad news for markets,” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, told CNBCTV18.com.

But there’s a silver lining. A prolonged crisis in China’s realty market can aid inflows into emerging markets such as India.

“The crisis will further dent FPI inflows into China after the regulatory crackdown dented foreign investors’ risk appetite… From this perspective, the Chinese crisis is good for India since India’s growth is robust and leading indicators reflect sustained resilience,” Vijayakumar said. 

Foreign portfolio investors remained net purchasers for 13 straight days in a buying spree that paused last week.

The inflows into Indian shares is among the primary boosts for Dalal Street, helping benchmark indices come within five percent of their all-time peaks in October 2021 after sliding to what experts refer to as one of the slowest bear markets of all time earlier this year.

Simply put, more of sustained buying by FPIs may augur well for the Indian market, though some say bouts of correction in the near term cannot be ruled out.

Indian equities in for some consolidation

According to market veteran Nilesh Shah, some correction is on the cards for Indian equities given the worse-than-expected earnings season.

“We are at a stage where there is a need for consolidation and the next move of the market will depend on whether global uncertainty starts to recede or to increase,” Shah, Managing Director at Kotak AMC, told CNBC-TV18. 

He believes that a key concern in the market is equity valuations, which remain above their historical averages compared with peers.

What about India’s property market?

China has a high credit-to-GDP ratio, which implies a higher participation of the banking sector in a country’s real economy.

The real estate sectors of India and China are two opposite ends of the spectrum, Jitania Kandhari of Morgan Stanley told CNBC-TV18.

“The share of GDP from real estate and ancillary industries — this is work done academically — is 25 percent in China, a huge part of the economy. In India, depending on estimates, it’s anywhere between 7-9 percent. The starting point in terms of the real estate contribution to both the absolute GDP and GDP growth is much more favourable,” she said.

Besides, China’s moves have triggered a decline across commodity prices after months of wild swings, in anticipation that the Chinese economy will need further stimulus to gain the lost momentum.

“The fall in commodity prices may aid India’s property market which has been battling with a rise in input costs, with these increases being eventually passed on to the buyers,” said Prashant Thakur, Senior Director and Head-Research at ANAROCK Group.

“With China’s interest rates on a decline and with India increasing the same, higher investments may flow into our country, which may also benefit the property market,” he told CNBCTV18.com.

Many experts believe India’s property market is much better positioned compared with China’s

Real estate prices in India have been flat over the past 10 years, Kandhari pointed out.

“In terms of the consumer, the affordability and the developer, Chinese developers are completely clogged. There’s a lot of debt. It’s sloshing around all over unseen,” she added.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Property developers show signs of pickup as buyers digest price hikes

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Real estate stocks saw sharp gains on Thursday, a day after business updates from property developers Macrotech, Sobha and Phoenix Mills showed robust demand despite red-hot raw material inflation. Signs of strong demand in the industry boosted the entire real estate basket, helping Nifty Realty clock its biggest jump in more than two weeks.

The realty index tracks the performance of 10 stocks, including Godrej Properties, DLF, Prestige, Brigade and Oberoi Realty.

Sobha achieved its highest ever sales in a quarter, in terms of volume as well as value, according to a regulatory filing. The Bengaluru-based real estate company’s sales volume touched a record 1.36 million square feet in the April-June period, up 51.7 percent compared with the corresponding period a year ago. 

In terms of value, the company’s total sales jumped 67.7 percent on year to Rs 1,145 crore.

Sobha’s average price realisation — a key metric for property developers that determines the selling price per unit of a product — improved to Rs 8,431 per square foot from Rs 7,626 a square foot in the year-ago period.

The launch of three projects helped Sobha take its sales volume as well as value from the Bengaluru market to a record level.

Sobha continued to see strong demand across segments particularly in Bengaluru and Gurugram with strong cash flows helping it reduce its debt further, according to the filing.

Macrotech Developers (Lodha) posted strong pre-sales, with a nearly three-fold jump in the April-June period to Rs 2,814 crore from Rs 957 crore in the year-ago period, according to a filing. Its collections increased 53 percent on year to Rs 2,616 crore.

The company’s net debt from its India business came down to Rs 8,858 crore, 28 percent lower compared with the year-ago period. On a sequential basis, the net debt came down by five percent.

Preliminary data from realty companies on their performance in April-June comes ahead of the onset of the earnings season, at a time when the RBI has hiked the key interest rate by 90 basis points from a record low during the pandemic.

Catch latest market updates with CNBCTV18.com’s blog

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Land deals are up almost 40% than last year and Hyderabad is shining like a pearl, says report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Telangana struck gold at Davos on the first day of the World Economic Forum, bagging two deals with an investment of Rs 1,000 crore. A major beneficiary of this would be Hyderabad, the state’s largest city.

Back home, too, the city of pearls has emerged as the go-to place for land deals. As per a recent report by property consultant Anarock, of the 1,237 acres of land deals that were stuck by property developers since January this year, Hyderabad accounted for 59 percent, or 715 acres to be exact.

A major chunk of land in Hyderabad, 600 acres, was bought by Hetero Group at Rs 350 crore from an undisclosed seller. The pharma company has not divulged the proposed development plan for the parcel. Microsoft also bought 40 acres for a data development centre.

In contrast to Hyderabad’s 715 acres, which includes a deal with UAE-based Lulu Group, Bengaluru saw three separate deals for 140 acres and the Delhi National Capital Region (NCR) saw the sale of 106.3 acres by way of five transactions.

Pune saw five separate deals for over 91.1 acres, and the land-starved Mumbai Metropolitan Region (MMR) saw five deals involving 54.85 acres, all earmarked for residential developments.

Also Read: NCR property market saw highest price hikes but Mumbai still has the most expensive homes, says report

The total acreage transacted by way of 28 deals this year was 38.3 percent higher than the 763 acres transacted by way of 14 deals from January to June 2021, the report revealed. These deals have been for residential, mixed-use, data centre and logistics centre developments.

Of total deals in 2022, 351 acres by way of 18 transactions were for residential developments. According to Anarock, the leading developers and entities who bought land parcels for residential developments include Godrej Properties, Oberoi Realty and Mahindra LifeSpaces, among others.

Also Read: These 5 banks are offering the best home loan interest rates

“Land remains an important focus area for the sector post-COVID, with many well-capitalised developers and other entities sealing deals in the first five months of 2022,” said Anuj Puri, chairman of Anarock.

“Compared to the first half of 2021, the number of deals has doubled, and there’s more than a month to go for the half-year mark,” he said, adding residential development would continue to remain the prime focus for real estate developers, despite the interest-rate hike.

“The robust housing demand hasn’t lost steam despite interest rates and property price hikes,” he said, adding, “However, these two factors may yet reflect in the momentum going forward.”

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As Nifty50 goes in to correction zone, are investors moving towards real estate now?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Does it make more sense to look at real estate as an investment avenue instead of equity now? Especially when foreign institutional investors (FIIs) are steadily exiting Indian shares while Dalal Street is — once again — talking about elevated stock valuations.

Experts and industry veterans are banking on the improving demand for the property market, even though the space faces three key challenges:

• Surging input costs
• Hikes in COVID-era interest rates
• The possibility of another deadly wave of the pandemic

Could it be that investors are taking out cash to put in the good old asset class of real estate?

“We have seen a marginal rise in interest from retail investors to take long-term positions in real estate. Volatility in the stock market has reinstated that physical assets such as real estate are much more stable and also do not completely erode capital as may be the case with equity investments,” Anuj Puri, Chairman of property consultant ANAROCK Group, told CNBCTV18.com.

Remarks from the industry veteran come as India returns to normalcy two years since its first full lockdown to curb the coronavirus outbreak, though the common man is on the back foot amid resurgent infections in parts of the world. 

Yash Gupta, Equity Research Analyst at Angel One, told CNBCTV18.com that record low interest rates, rising affordability and stamp duty reductions by a few states have boosted demand in residential property in the past four quarters given the low base of 2020. 

Lenders have started to make home loans costlier since the May 4 hike in the repo rate is likely to trigger price hikes by realty firms in order to maintain margins, Gupta said.

Realty vs equity now

Many experts are hopeful of a halt, if not reversal, in the trend seen in institutional money flow in the Indian equity market over seven full months.

FII inflow was one of the primary factors behind a near one-sided rally in Indian equities that ended in October 2021.

They are not sparing realty stocks either.

Property consultant Knight Frank has identified five top trends to watch out for in 2022:

• Residential market on a strong foot
• Tailwinds of record IT hiring for office segment
• Co-working in flexible occupier workspace strategy
• E-commerce boom to benefit warehousing sector
• Digital consumption and policy impetus to drive data centre growth

Realty as an investment bet: Where to look 

The best way for investors to tap the market now is through quality assets being developed by reputed developers. That is the message from Puri of ANAROCK.

In his view, housing — either apartments across cities or plotted developments primarily in cities such as Bengaluru, Chennai, and parts of the NCR — are the most lucrative segments within real estate.

With the pandemic receding, he expects high demand not just in the housing segment but also in the commercial space over the next few years.

Can Dalal Street-faithful also play the theme?

HDFC Securities remains positively biased on the realty space, and expects Tier 1 developers to gain market share.

The brokerage has DLF, Oberoi Realty, Phoenix Mills, Brigade, Prestige and Mahindra Lifespaces as its top picks.

Gupta of Angel has two ‘buy’ recommendations: Oberoi Realty and Sobha. “We expect demand momentum to continue but we may see some slow down in pre-sales growth numbers,” he said.

He expects top 10 firms to gain market share from the unorganised space, citing low inventory levels for the last seven years.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Godrej Properties shares tumble; why is Street punishing the stock?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Godrej Properties shares fell nearly 10 percent on Friday, continuing to decline for a second straight day. The property developer’s stock ended 9.8 percent lower at Rs 1,506.6 apiece on BSE. At the current level, Godrej Properties shares have lost 15.5 percent of their value in two days.

Brokerage firms Jefferies and CLSA have lowered their target prices for the realty company’s stock.

Weakness in the stock comes at a time when Godrej Properties has announced plans to invest Rs 400 crore to acquire around 10 percent in DB Realty, and set up a Rs 600-crore equal joint platform to develop slum redevelopment projects.

With the Rs 300 crore in the platform, Godrej Properties will take its total investment to Rs 700 crore.

ALSO READ: Godrej Properties plans to invest in DB Realty

In an interaction with CNBC-TV18, DB Realty Managing Director Shahid Balwa said it will be a strategic investment for the company. “There are no special powers. The board composition remains unchanged,” he said.

So how is the Street reading Godrej Properties news updates?

Jefferies maintained a ‘buy’ rating on Godrej Properties but reduced its target price to Rs 2,000 from Rs 2,750, saying the company’s investment in DB Realty and the investment in the entity is a near-term de-rating event.

The brokerage said the company’s pre-sales in the October-December were disappointed due to launch delays though the March quarter appears to be promising. Jefferies also said Godrej Properties has done well to grow through stressed asset acquisitions.

“The underlying demand for real estate and the underlying fundamentals of the industry are extremely sound, and growing better with every quarter. Maybe one can overlook one or two soft quarters for Godrej Properties given that its prospects for the next 2-3 years are exceptional,” Dipan Mehta, Director at Elixir Equities, told CNBC-TV18.

He is positive on Godrej Properties for its:

• good corporate governance standard
• pan India scale
• good brand
• good execution

“Although there is a mild disappointment on the earnings front and this news flow (the JV with DB Realty), I am not yet ready to sell out on Godrej Properties. It’s the bluest of blue-chip real estate companies, and once you exit the stock, getting into it from a portfolio perspective becomes very difficult,” the market veteran said. 

CLSA retained its ‘sell’ call on Godrej Properties, bringing down its target price to Rs  1,424 from Rs 1,563. The brokerage said the company’s deal with DB Realty lacks merit, citing a convoluted deal structure and risk-prone slum rehabilitation projects.

It said Godrej Properties’ real with DB Realty and its foray into slum rehabilitation projects, which are prone to get stuck, was unwarranted.

Market expert Prakash Diwan told CNBC-TV18 that in his view, the market is overreacting on Godrej Properties, as it “didn’t expect something like this from Godrej. But somewhere, I’m sure people will kind of reconcile to that and it might not be as ugly as it seems.”

“What came through from the Godrej Properties side was something which the market is not used to. If Godrej has to spread its wings within the Mumbai market, and has have to move beyond this whole JV model, it will have to do something to participate in the mass housing market as well. So I don’t see any reason why that should be looked at with such a negative,” he said.

Godrej Properties shares have gained 13.8 percent in the past year, as against the Nifty’s rise of 18 percent.

During market hours on Thursday, Godrej Properties reported a net profit of Rs 38.9 crore for the October-December period, as against a net profit of Rs 14.3 crore for the corresponding period a year ago. Its revenue increased 63.5 percent on-year to Rs 278.8 crore.

The company’s sales value came in at Rs 1,541 crore for the December quarter, up 3.6 percent on a year-on-year basis but down 40 percent sequentially.

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View: Home buying momentum to boost home loan market in 2022

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Home buying made a comeback after months of uncertainty caused by the second wave of the pandemic in 2021. Consumers seized the opportune home buying moment thanks to muted prices and low home loan interest rates. Banks doled out more home loans, almost equivalent to pre-pandemic levels of 2019. All this meant better times for real estate developers who could unlock liquidity from their inventories and sell across the board from pre-launches to ready-to-move flats.

All in all, it was a good year for India’s real estate sector given the circumstances.

This momentum in home buying will move on to the next level in 2022 and give a fillip to the home loan market. Consumers will continue their home buying spree and leverage the record low interest rates. One can expect home loans to be one of the most sought after lending products of 2022.

The RBI has not changed the lending rates for quite some time. It is difficult to predict a change in the coming quarters, but one can expect the low interest rate trend to continue. This has triggered a trend of home buying and simplified budget home purchases across major cities. It is a situation that is letting all stakeholders win together. This is not expected to change anytime soon. If the property price is right, chances are you will get a superb low interest deal to go with it in 2022.

My favourite bet on the home loan market for 2022 is the shift towards digital lending.

It all began with the first full lockdown to curb the spread of COVID in 2020. Banks and policymakers were forced to simplify their lending procedures. From video KYC to virtual application, the home loan journey started to get simplified. The biggest disruptor is never just technology, but a player who seizes an opportunity to leverage changing dynamics.

The entry of fintech startups led to the beginning of simplification of the overall home loan process. The game changes when the marketplace doesn’t just connect the bank with the borrower but also enables the completion of the entire process under one roof: from the selection of best loan options to the online application.

In my view, going this full-stack route is the biggest trend as it democratizes the process for borrowers on one hand (access, best rates, and simplicity of application) and on the other hand, becomes a trusted partner to the banks.

In my view, digital home loan marketplaces will lead to a paradigm shift in the home loan market in 2022. They will alter consumer behaviour, simplify home loans and replicate what fintech has already done in other spaces such as insurance, trading and personal loans.

Last but not the least, a market is always understood through its numbers, which makes pre-pandemic home loan volumes of 2019 a benchmark to chase. I am optimistic 2022 will see new benchmarks getting established and home buying will boost home loans as well. If you are a consumer, watch out for great home and home loan deals in 2022. If you are part of the home selling or banking ecosystem, well, this is indeed the most exciting year to reap the benefits of growth after few challenging quarters for the sector.

–Pramod Kathuria, Co-Founder and CEO of Easiloan. The views expressed in this article are his own.

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