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Nifty Realty index zooms 97% in 2017; set to post biggest rally in 10-years

Total 12 stocks include Kolte-Patil Developers, Sobha, DLF, Dilip Buildcon, Sunteck Realty, Indiabulls, Puravankara, Godrej Properties and Brigade Enterprises have rallied up to 370% so far in 2017.

SI Reporter  |  Mumbai 

Real estate

The and the S&P BSE Realty indices have gained more than 90% thus far in the calendar year 2017 (CY17), and is set to post their sharpest rally in the past one decade, on the back of
 an improvement in affordability, and multiple developments on the policy initiatives front.

Putting behind demonetisation announced by the government in November 2016, the index and the S&P BSE Realty zoomed 97% and 94%, respectively, so far in CY17. Both these indices hit their multi-year highs, and are set to record their biggest yearly gain since inspection.

By comparison, Nifty 50 and the S&P BSE Sensex are up 26% each thus far in CY17.The value of the realty indices is available from the calendar year 2007 with the stock exchanges.

Between November 8, and December 30, 2016, the BSE realty index was down 17% after the Government announced the demonetisation of all Rs 500 and Rs 1,000 banknotes. In entire previous CY16, it fell 6% against 2% rise in the benchmark index. Earlier in CY09, the realty indices had rallied 70% after falling 82% in CY08, post Lehman crises.

Date BSE Realty % chg Nifty Realty % chg
31/12/2017 12727.4 -    
31/12/2008 2274.1 -82.1 285.96 -
31/12/2009 3855.8 69.5 489.07 71.0
31/12/2010 2856.2 -25.9 379.95 -22.3
31/12/2011 1375.7 -51.8 184.2 -51.5
31/12/2012 2110.8 53.4 281.3 52.7
31/12/2013 1433.4 -32.1 184.6 -34.4
31/12/2014 1555.1 8.5 203.1 10.0
31/12/2015 1344.3 -13.6 172.6 -15.0
31/12/2016 1263.9 -6.0 165.35 -4.2
29/11/2017 2445.8 93.5 325.3 96.7
         
*% change over previous year    

The outperformance in CY17 comes amid multiple developments on the policy initiatives front - from the implementation of Real Estate (Regulation and Development) Act, 2016 (RERA) that came into force with effect from May 1, 2017 - to amendments in Real Estate Investment Trust (REIT) regulations and Infrastructure Investment Trusts (InvITs).

The government has recently increased the area of a unit on which a first time buyer can avail benefits under the Credit Link Subsidy Scheme (CLSS) scheme of the Pradhan Mantri Awas Yojna (PMAY).

Total 12 stocks include Kolte-Patil Developers, Dilip Buildcon, Sunteck Realty, Indiabulls Real Estate, Puravankara, Godrej Properties, Sobha, and Brigade Enterprises – have become multi-bagger and rallied up to 370% so far in CY17.

Notwithstanding the current slow pace of activities in the housing/real estate market, feedback from developers, lenders and government officials indicates that the turnaround is not far away, according to CLSA.

“The Government is committed towards its ‘Housing for all’ program, which implies a large jump in Government spends going forward. We believe, however, the real driver is improvement in affordability. Developers highlighted that land prices have been correcting and end-product price cuts have helped demand. Housing market upturn is likely to be visible during 1HCY18 and would be one of the most attractive multi-year investment themes in India,” the foreign brokerage said in latest report on market outlook.

Fitch Ratings expects improving macroeconomic conditions and better consumer sentiment in some south and south-east Asian to increase business activity and lead to more robust demand for property.

India's consumer spending to expand at a faster pace of 9.1% in FY18-19 (FY17-18: 8%). Improvement in the macroeconomic environment and a decline in interest rates may boost demand for property, the rating agency said in sector 2018 outlook.

Fitch Ratings expect unsold inventory to fall in 2018 as most developers will focus on completing their property projects to comply with RERA. Unsold inventory for a sample of seven large developers rose to Rs 668 billion at FYE17, from Rs 631 billion at FYE16. This translates to an inventory turnover of around three years of annual revenue at FYE17, up from around two years at FYE16.

Company 30/12/2016 LTP  % chg
Kolte Patil Dev. 83.70 391.50 367.7
Dilip Buildcon 229.25 995.00 334.0
Sunteck Realty 108.08 420.50 289.1
Puravankara 43.55 149.50 243.3
Indbull.RealEst. 71.30 218.50 206.5
Marathon Nextgen 198.25 598.00 201.6
Ajmera Realty 141.35 344.15 143.5
Godrej Propert. 302.70 726.15 139.9
Sobha 246.35 578.30 134.7
Prozone Intu 34.40 72.95 112.1
Brigade Enterpr. 150.50 315.35 109.5
DLF 111.35 228.30 105.0
Prestige Estates 171.20 340.00 98.6
Oberoi Realty 294.75 495.70 68.2
NBCC 159.40 264.15 65.7
       
Nifty Realty 165.4 325.3 96.7
S&P BSE Realty 1263.9 2445.8 93.5
       
LTP : Last traded price on BSE in Rs at 10:40 AM
The companies having market-cap of more than Rs 500 crore

First Published: Wed, November 29 2017. 11:02 IST
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