Current street expectations of high volume growth along with high prices of real estate are unlikely to pan out. Expect prices of residential property to correct to the tune of 10% over the next few months.
The slowdown in home loan disbursements, among other factors, underpins our view that
the residential real estate market has slowed down considerably.On the pricing front, we forecast a correction of 10% from current prices in the next 12 months but do not rule out steeper correction.
Kotak is not very bullish on the sector. Uday Kotak @ India Incredible at 60 in New York said that Equity is the best asset class for Indian investor to be in today.
Unitech's residential division has the largest volumes under development amongst Indian listed real estate companies with more than 25 mn sq. ft under construction in National Capital Region and Kolkata. Unitech has access to a low-cost land bank of 480 mn sq. ft across 14 cities.
NAV estimate for Sobha and DLF for a 10% reduction in selling price in the next 12 months. New fair price for Sobha Developers, based on March 2009 NAV, is Rs870/share and the rating is changed to In-Line (Outperform previously). Revised target price for DLF is Rs750/share (Rs705 previously) based on a 15% premium (5% earlier) to March 2009-based NAV of Rs646.
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