Real estate stocks have been among the biggest losers in the market this week, but top property developers say there is no cause for worry.
While the BSE Realty Index has fallen 9.39% this week, the benchmark Sensex has seen a 2.47% decline.
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“Sales are robust and the sector is doing very well,” said Boman Irani, chairman and MD of Rustomjee, a Mumbai-based listed developer. He added that the overall markets have been on the decline, which has also impacted realty stocks.
Housing sales across the top 7 cities posted a drop of 4% at nearly 459,650 units in 2024, compared to 476,530 units in 2023. However, despite the drop in the number of units sold, the overall sales value witnessed an increase of 16%, reaching nearly Rs 5.68 lakh crore in 2024, up from Rs 4.88 lakh crore in the previous year, according to data from Anarock.
“The fall in stocks has nothing to do with demand and supply. Real estate companies announced substantially good numbers in Q3,” said Dhaval Ajmera, director, Ajmera Realty & Infra. “Stock markets are not conducive enough, Nifty is down. So, there is a ripple effect,” he said.
During the April-December period, Ajmera’s sale bookings were up 14% to Rs 830 crore from Rs 730 crore a year ago, according to a regulatory filing.
Amit Bagri, CEO at Kotak Mahindra Investments, which provides loans to real estate firms, pointed out that though real estate stocks have fallen 40% from their one-year highs, in the last two years, the stocks have gone up by 50%. In 2024, with 33.1% returns, the BSE Realty Index was the second-best sectoral performer after healthcare, he said.
Bagri added that between CY2023 and CY2024, the growth has been flattish in terms of million square feet sold. “Equity investors value growth above everything,” he said.
However, he added that ratios such as debt to sales and debt to collections are better and leverage is under control at most of the companies. “Even if sales fall 5% next year, with lower leverage, you can still manage,” he said.
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The sector is also expected to get a leg up after the measures announced in the Budget.
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