Be selective in the real estate space, focus on players that have operational assets, says Adhidev Chattopadhyay, Real Estate Analyst, Emkay Global Financial Services.
Gulam Zia, Executive Director, Knight Frank and Adhidev Chattopadhyay, Real Estate Analyst, Emkay Global Financial Services in an interview to CNBC-TV18 shared their views on reasons for rally seen in the real estate space.
Zia believes with Real Estate Regulatory Authority (RERA) Act expected to bring a lot of clarity in the realty space, could be the likely trigger but he still advices looking at individual stocks separately and not the space as a whole.
According to him if one were to segregate residential and commercial space, then there has been hardly any improvement in the residential space at least in the NCR region. Although Mumbai is holding on and Bengaluru is showing marginal improvement, Pune, Hyderabad are showing better improvement. So, the housing market has been stagnant to negative.
However, commercial or office shows marked improvement and so companies in this space are performing doing well, says Zia.
Agreeing with Zia, Chattopadhyay also says that office market has seen traction, whereas residential has slowed down.
The office market has seen absorption of over 30 million sq ft and therefore developers who build their assets during bad times are gaining now. They now have most of their annuity assets operational and running.
They are also seeing lot of interest from global investors to pick up the rental yielding assets, says Chattopadhyay.
However, talking about the rentals, Zia says on an average for the country as a whole the office rentals haven’t move up beyond 7-8 percent. Only Pune has done better because there is not much space available there. So, although annual growth rate in office rentals is nothing to talk about but there has been a steady growth.
Stock specific, Chattopadhyay favours Brigade Enterprises and Prestige Estates in Bengaluru and also Phoenix Mills which is pan-India marquee retail asset play. He advises being selective and to focus on players having operational assets.For full discussion, watch video