Realty index surges 4%; Oberoi Realty hits record high, Phoenix Mills up 8%

GIC, Singapore's sovereign wealth fund and Phoenix Mills, have entered into a strategic partnership to establish an investment platform for retail‐led mixed‐use assets in India

Shares of real estate companies were in focus on Thursday with the S&P BSE Realty and the Nifty Realty indices ralling 4 per cent each on the bourses in intra-day trade.

Individually, Oberoi Realty, Phoenix and Prestige Estates surged between 6 per cent and 10 per cent on the BSE while Indiabulls Real Estate, Sunteck Realty, Sobha, DLF and Godrej Properties gained in the range of 2 per cent to 5 per cent. At 01:18 pm, the S&P BSE Realty and the Nifty Realty indices were up 4 per cent each as compared to less than a per cent gain in the benchmark S&P BSE Sensex and Nifty50 indices.

Shares of Phoenix Mills soared 8 per cent to Rs 875.30 after the company and GIC, Singapore’s sovereign wealth fund entered into a strategic partnership to establish an investment platform for retail‐led mixed‐use assets in India. This platform will seek to develop, own, and operate retail‐led, mixed‐use developments in India. Post the development, the stock was trading close to its 52-week high level of Rs 888.95 hit in February 2021.

"GIC will acquire a significant minority stake in a $733 million portfolio of retail‐led mixed‐use developments, located in the prime consumption centres of Mumbai and Pune. These assets, totaling around 3.4 million sq ft of leasable retail and office space, are currently amongst PML’s most prime and well‐performing operational assets," the companies said in a joint press release.

Commenting on the partnership, Kishore Gotety, Co‐Head (Asia ex‐China) of Real Estate, GIC said: The unprecedented global crisis is impacting consumer sentiments and that the necessary lockdown has made it challenging for all businesses, especially those in the retail sector.

"However, the long‐term structural growth that the Indian retail industry continues to offer due to favourable demographics, urbanisation, growing middle class, and increasing consumerism trends will still benefit the Joint Venture. We expect continued strong performance in the Indian retail sector as organised retail penetration increases and population density remains high," he said .

Meanwhile, shares of Oberoi Realty surged 10 per cent to hit a record high of Rs 662.85, surpassing its previous high of Rs 641.70 touched on July 4, 2019.

In another development on Wednesday, the Union Government approved the Model Tenancy Act for circulation among states and union territories, which will adopt the changes by enacting fresh legislation or amending their existing rental laws. CLICK HERE FOR FULL REPORT

Analysts at Edelweiss Securities believe that even though housing demand will be impacted by the second wave, absorption will bounce back soon aided by improving affordability.

"We believe realty stocks are attractive from a medium-term perspective considering rising consolidation. With investors getting increasingly confident about housing sales trajectory, we believe companies with sizeable land banks may benefit from a re-rating going ahead," the brokerage firm said in real estate sector update.