Hi, I am Gunjan Grover.
Today we will talk about the top 6 stocks of the real estate sector.
I will tell you facts related to real estate.
What are the types of market segments, and advantages?
What is the recent trend of real estate?
How is its future outlook?
Finally, what are the top 6 real estate stocks according to market cap?
First, let's talk about how big is real estate sector is and whats its potential is.
After agriculture, the real estate sector is the second-highest employment generator.
As per government data and forecast, its value is expected to reach $1 trillion by 2030.
Housing for all initiative is expected to bring $1.3 trillion investment in the housing sector by 2025.
In 8 major cities, home sales volume doubled.
During the Oct-Dec period, homes sales volume recorded 61593 units which were 33403 units in the previous quarter.
Under the Pradhan Mantri Awas Yojana scheme,
the government will make 20 million affordable houses in India's urban areas by 2022.
Now let's talk about its market segment.
The first is Residential space.
Residential space contributes 80% to the sector.
It’s the main reason for real estate growth.
Covid 19 affected this sector.
But we can see a revival in housing sector demand.
If demand stays strong for residential space, then expectations from the whole sector will be the same.
Next is commercial space.
Before covid 19, this segment was performing well.
But pandemics affected this segment badly.
As work from home became popular, pressure is on rental prices and leasing prices.
Many properties are getting vacant.
Next is retail space.
Retail space is a small part of real estate.
Due to fewer organized retailers, residential or office space developers are developing it.
In 2020, private equity investors are showing interest in the real estate and warehouse segment.
Where retail space got 220 million investment there warehouse segment got 971 million dollars investment.
By 2022, it is expected that retail space will go above 39 million square feet.
Next is hospitality space.
After the covid breakout, the hospitality industry is showing revival.
Due to country-wide lockdown, people were unable to travel.
To end this frustration, we can see the latest trend of revenge travel.
Room inventory is expected to increase in branded hotels.
Special economic zones.
From Jan 31, India approved 425 SEZs out of which 265 are operational.
Most SEZs are expected in the IT and BPO sectors.
Now let's discuss the advantages of the real estate sector.
In 2020, $5 billion institutional investment was recorded.
In the last quarter of FY21, private equity investors did 19 deals in real estate which is 23946 crores.
The young population, rising literacy, urbanization, and investing household income make
India the top 10 country where the housing market is most appreciated.
Real estate as a sector is growing but every developer is not benefiting.
The government’s regulatory frameworks, liquidity crunch, and changing customer preferences
make small and unorganized developers difficult to cope with.
Due to which this industry is showing consolidation.
Initiatives by the Government of India like RERA, 100% FDI for townships & settlement projects, housing for all scheme,
and tax deduction of 1.5lacs on housing loans' interest. These can boost the real estate sector.
Keep in mind that real estate is a cyclic sector were up and down cycles come and go.
If we enter at the wrong time, our investment can get stuck for a long period
even though the investment is in direct real estate or real estate stock.
Now let's talk about recent trends and the future outlook of this sector.
The first is portfolio diversification.
To diversify the portfolio, most of the big players are adding residential and commercial projects.
The second is consolidation.
To plan and develop a real estate project, takes a lot of time.
Funding is not easy too.
Due to financial issues, small players can't survive.
Opportunities increase for big players.
Hence, the real estate sector showed many M&A deals.
In Nov 2020, Prestige Estates Projects Ltd. sold a major part of their portfolio- office, retail, and hotel properties to
Blackstone for Rs.12745 crores.
Next is execution-based models.
There was a time when a company was valued based on the land band.
But now companies are considered good who have the most successful executed housing projects.
Next is Real estate investment Trusts (REITs).
This is a kind of mutual fund whose underlying asset is real estate.
When a sponsor creates REIT, they transfer their asset ownership to a trust on behalf of which they get units like mutual fund units.
This is a kind of tax-efficient investment where real estate is an income generator.
Its demand will increase in the future.
In India, the first REIT came in 2019.
Now we have 3.
1st is Mindspace REIT.
2nd is Brookfield REIT.
3rd is Embassy REIT.
Let's talk about the top 6 real estate stocks which we selected based on market cap.
1st is DLF.
Founded in 1946 by Chaudhary Raghvendra Singh.
DLF started by creating 22 urban colonies in Delhi.
In 1985, the company geographically expanded its operations in Gurgaon.
In Gurgaon, they built exceptional living and working spaces for new Indian global professionals.
They made footprints in residential, commercial, and retail properties in 15 states and 24 cities.
DLF is also India's largest listed real estate company.
In both development and rental businesses, they have a good liquidity position.
DLF is trying to achieve efficiency soon in the organization, and control cash flows.
The market cap is 83183 crores.
Its PE ratio is 55. PB ratio is 2.35.
Return on equity is 3.13%.
NPM is 20%.
1-year return js 124%.
Next is Godrej Properties.
Established in 1990, Godrej Properties is the largest developer of residential space in 2021.
In real estate, Godrej properties along with the Godrej group's philosophy which are Innovation, Sustainability, and Excellence are indulged.
In few years, Godrej properties have got many rewards and recognitions.
Their projects have always been of high quality.
Commercial office project, Godrej BKC, is the only constructed LEED platinum-rated building in India's leading commercial district- Bandra Kurla Complex.
It has demonstrated environmental sustainability for Godrej properties.
Godrej Garden City in Ahmedabad was selected as one of the only 2 projects in India and
16 worldwide by the Clinton Foundation to partner with them in the goal of achieving a climate positive development.
The company’s core strengths are-
Their Godrej brand name.
Company's effective land sourcing model.
Company's strong project pipeline.
Their project sales and execution capability.
It has access to capital and sustainability leadership.
Godrej’s market cap is 43845 crores.
Its return on equity is -3.38%.
Its NPM is -25%.
1-year return is 80%.
Next is Oberoi Realty.
For the last 3 decades, in Mumbai's real estate sector Oberoi realty is known for its
trust, transparency, cutting-edge technology, and differentiated service.
Oberoi realty developed more than 42 projects in Mumbai's strategic locations.
Its total area is 11.89 million square feet.
Currently, the company is making projects in 45.31 million square feet of land banks in other regions except for Mumbai.
The company’s plans for ongoing projects are aggressive.
Despite overall sectors' weak performance, Oberoi realty's sellable area in FY20 increased from 401914 sq. ft. RERA carpet
to 10,64,563 sq.ft. RERA carpet area in FY21.
Famous projects of Oberoi realty are-
Oberoi Garden City in Goregaon
Mulund- West
Sky City in Borivali East
JVLR in Andheri East
Three Sixty West in Worli.
Oberoi’s market cap is 28788 crores.
PE ratio js 36.
Return on equity is 8.18%.
NPM is 49.
1-year return js 108%.
Next, let's talk about Prestige.
In a decade, Prestige Estates made itself India's leading and successful developer.
Since 1986, the company has done 250 projects in 136 million sq. ft.
With time the company diversified its operations in related and non-related services.
Like interior designing by Morph Design Company.
In south India, Prestige Estates are the single developer which covers all real estate segments.
Like residential, commercial, retail, leisure, and hospitality segments.
Prestige Acropolis, Prestige Ozone, Forum Mall in Banglore, the Collection in UB City,
Prestige Golfshire, Prestige Shantiniketan, and Prestige Lakeside Habitat are Prestige Estates' famous projects.
The Prestige market cap is 18087 crores.
PE ratio is 48. PB ratio js 2.71.
Return on equity is 7.03.
NPM is 27%.
1-year return is 91%.
Next is phoenix Mills.
In the real estate sector, phoenix Mills caters to Mega retail malls, entertainment complexes, commercial spaces, and Hospitality units.
It operates in all real estate development aspects like planning, execution, marketing, management, maintenance & sales.
The co. has real estate assets in Mumbai, Banglore, Chennai, Pune, Raipur, Agra, Indore, Lucknow, Bareilly, & Ahmedabad.
The company has project portfolio is diversified in retail, commercial, hospitality & residential segments.
It has a good presence in India's top cities like Mumbai, Pune, Chennai, Bangalore, Kolkata, etc.
Phoenix Palladium & Market city are quite famous.
Phoenix Mills market is 14957 crores.
PE ratio is 217. PB ratio is 3.06.
Return on equity is 1.22%.
1-year return is 38%.
Next is Brigade Enterprise Ltd.
Brigade group is one of India's leading property developers with 3 decades of expertise.
Incorporated in 1986, the co. has constructed many landmark buildings.
They transformed South India's major cities like Bangalore, Mysore, Mangalore, Hyderabad, Chennai, and Kochi into skyline cities.
The co. developed in residential, commercial, retail, hospitality, and education sectors.
Brigade Group has constructed 250 buildings in 70 million sq. ft.
Brigade group's market cap is 9202 crores.
Return on equity is -1.31%.
NPM is -2%.
1-year return js 143%.
So these were real estate’s top 6 stocks in terms of market cap.
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On that note, is me, Gunjan Grover.
Signing off.
Bye-bye. Take care.
Keep calm and Invest on.