The Covid crisis battered the realty market in H1CY21, but demand remains strong as compared to last year. Despite rising interest rates and housing prices, brokerage and research firm Edelweiss believes that the momentum in sales will continue, especially for organized developers.
“We believe that given the increasing consolidation, realty stocks are attractive from a medium-term perspective. With investors increasingly confident about the housing sales trajectory, companies with large land banks such as DLF (Buy), Sobha (Buy) and Macrotech Developers (Lodha) (Buy) may benefit from re-rating going forward ,” the note said. DLF and Shobha will continue to be Edelweiss. top stock picks Brokerage houses added to the housing space.
June 2022 Housing demand in India’s top seven cities improved by 4% MoM/57% from a year ago. Launches continued to decline (21% down from last month, but up 3% annually). In Q2CY22, demand fell 7% QoQ, but supply fell 18% QoQ. H1CY22 demand/supply grew 43%/21% year-on-year (YoY).
RERA-driven consolidation is increasing growth opportunities for organized players, and COVID-19 has only accelerated the process. We believe that absorption will remain healthy, supported by a high degree of affordability, despite the rise in mortgage rates/housing prices. However, the launch will remain on hold due to lack of liquidity, Edelweiss highlighted.
Launches remained soft and were down 21% MoM (but 3% YoY) in June 2022. Overall, launches were down 18% sequentially in Q2CY22. Supply declined quarter-on-quarter (QoQ), with Chennai and Pune being the least affected. H1CY22 launches have seen a year-on-year growth of 21%, the highest in MMR, followed by Bengaluru and Pune.
“All India absorption declined 7% QoQ in the current quarter due to seasonal factors and rising interest rates. Demand fell the most in Kolkata (down 28% QoQ), followed by NCR, Chennai and Pune (down 14-16% QoQ each). Bengaluru and Hyderabad each saw a 3-5% QoQ decline in demand. On the other hand, MMR was the only city which saw 1% QoQ growth in demand in Q2CY22,” it added.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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