Kotak Institutional caution on real estate space

Sandeep Bhatia, ED and Head of Sales, Kotak Institutional Equities is caution on real estate space.

Bhatia told CNBC-TV18, “On real estate I would advice caution. We feel that the valuations are expensive. So we would expect some kind of correction, the sector has done a fantastic balance sheet restructuring. In fact the best thing that the Indian companies have done in the last 6 months is to raise equity funding, which is good not only for the corporate sector but also for the Indian banking sector.”

He further added, “In the real estate sector, I think valuations need to correct before we can advice fundamental buys on that sector. I would think we would see good volume growth and transactions coming through. I think prices have stabilized across most large cities, we don’t see corrections in pricing coming through but clearly the valuations have run ahead of themselves and the sector is already under performing because the operations are going to take much longer to recover than the stock prices are building in. So I would advice caution on real estate right now.”