Realty Sector 2014: Indian real estate is a favoured destination for global investors. Overseas investors have put USD 14bn into this sector over a period from 2006 to 2012. In the past two years foreign investment have been around USD 1.2bn per annum.
In 2004 infrastructure sector performed well, whereas after 2008 economic meltdown this sector is struggling eversince. In past five years BSE sensex gained 112% while realty sector was at -18.6%. However the lost flavours of these stocks are recovering. Over the past three months when stock market have been rising ahead of general election BSE sensex gained 5.5% so has realty sector to 5%.
There is still more upside in this sector once there is a stable govt at the center. Other factors that are positively going to affect are, stock market rally, increased demand in housing due to rapid urbanisation, introduction of REITs( Real Estate Investment Trust).
Reits are instruments that help small investors access real estate assets. It will help both developers and investors, through better financing and investing options.Tax incentives are also attached with Reits.
When talking about stocks there is never a win win scenario. As there are always some pulling back factors. Construction cost has increased by 40% in past two years. Banks are lending more to the real estate company making cost of borrowing high. Despite of the odds this sector once again will show some good pace when there is a stable govt at the center. Although the valuation is cheap but hopes are high that they will outperform once the economy recovers.
In 2004 infrastructure sector performed well, whereas after 2008 economic meltdown this sector is struggling eversince. In past five years BSE sensex gained 112% while realty sector was at -18.6%. However the lost flavours of these stocks are recovering. Over the past three months when stock market have been rising ahead of general election BSE sensex gained 5.5% so has realty sector to 5%.
There is still more upside in this sector once there is a stable govt at the center. Other factors that are positively going to affect are, stock market rally, increased demand in housing due to rapid urbanisation, introduction of REITs( Real Estate Investment Trust).
Reits are instruments that help small investors access real estate assets. It will help both developers and investors, through better financing and investing options.Tax incentives are also attached with Reits.
When talking about stocks there is never a win win scenario. As there are always some pulling back factors. Construction cost has increased by 40% in past two years. Banks are lending more to the real estate company making cost of borrowing high. Despite of the odds this sector once again will show some good pace when there is a stable govt at the center. Although the valuation is cheap but hopes are high that they will outperform once the economy recovers.
