Real estate stocks to provide opportunity
The broader Indian market seems to have staged some sort of a comeback with Nifty touching 8,800 levels in the recent past. While the Nifty has seen an upsurge in recent times, the real estate sector has gone through a period of lull with leading stocks in the sector not showing any major signs of an up move.
The size of the real estate market in India is expected to reach $180 billion by the year 2020. Today, the real estate sector provides employment to a vast majority of Indians, second only to the agricultural sector and is expected to grow at more than 30% over the course of the next decade.
The sector has received substantial help from the central and state governments which have taken several initiatives to encourage development in the sector. The sector has received additional help from the Securities and Exchange Board of India (SEBI) which has proposed easier regulations for Real Estate Investment Trusts (REITs), such as raising the capital of investment of REITs assets in under-construction projects from 10-20% in order to attract the interest of developers.
The emergence of nuclear families, rapid urbanisation and rising household incomes are likely to remain the driving forces in all spheres of real estate including residential, commercial and retail. This development is most likely to get rubbed to the real estate sector stocks which we believe will be out of the woods soon.