Realty index nears 7-mth high, Oberoi Realty at new high

Shares of real estate companies continued their upward march on expectation that reduction in interest rates would increase the demand for properties going forward.

Oberoi Realty has surged 13% to Rs 323, its highest price since its listing in October 2010. Orbit Corporation, Ansal Buildwell and Purvankara Projects are trading higher by more than 5% each on the Bombay Stock Exchange (BSE).

According to an analyst, the improvement in macro-economic scenario with fall in inflation and cut in interest rates from Q1FY13 and the reduction in debt and improvement in cash flows either through monetisation of land, sale of non-core assets or strategic sale in projects led the rally among stocks in the sector.

The BSE, Realty index has rallied 56% from its recent low of 1,367 touched on December 20, compared to 21% rise in the benchmark index Sensex. Among the individual stocks, HDIL, Unitech, Prestige Estates, DB Realty, and Anant Raj Industries have rallied 80-130% each during the period.

“The calendar year 2011 saw high inflation, high interest rates, delays in approval from various authorities and uncertain global economic conditions which led to low demand in the real estate market. The realty stocks were trading at a very high around 50% discount to NAV prior to the recent rally,” said PINC Research in recent report.