Brokerages prefer realty firms with annuity assets amid stable cash flows

At beaten down valuations, annuity developers offer favourable risk-reward, it said. DLF, Prestige Estates, Phoenix Mills and others have large office properties

Brokerages are recommending stocks of real estate companies with annuity assets because of stable cash flows. They believe that demand for office properties will bounce back faster than others.

“While slowing global and domestic economies do not augur well for India’s property market, we believe annuity businesses, which provide stable and sticky cash flow, will show more endurance (vis-a-vis residential) during these tough times,” said a report by global brokerage firm CLSA last week.

CLSA said during the previous global slowdown of 2008-2009, the country’s office demand dipped in the short term (only in 2009), but then rose to even higher levels