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International brokerage Goldman Sachs maintained its buy rating on two Bangalore-based real estate companies on the back of relative affordability even as it remained cautious on companies with an exposure to the Mumbai real estate market.
An real estate sector report entitled ‘Affordability stable in Bangalore, but Mumbai inflation high’ authored by Puneet Jain, Aditya Soman and Indrajit Agarwal noted that southern markets have exhibited lower price inflation.
“We favour Buy-rated Bangalore-based Sobha Developers (on CL) and Prestige Estates as we believe demand in Bangalore will continue to remain stable as affordability remains stable, but are more cautious on developers with large exposure to the Mumbai residential market. We have a Buy rating on Phoenix Mills due to our expectation of increasing consumption at its market city malls despite weak overall consumer sentiment,” said the report dated December 16.
“Regionally price inflation has been moderate in Bangalore/Chennai but high in Gurgaon/Mumbai. Our affordability analysis suggests stable affordability for residential real estate in Bangalore (where price inflation has been 4% yoy) but affordability remains low for Mumbai,” added the trio.
Total launches were down 56 per cent in the second quarter of FY14 over the previous quarter. The total sales were to the tune of Rs.32100 crore compared to Rs.43500 crore in the previous quarter, noted the report.
