The real estate sector is set to overcome its decade-long depression and reinstate its place as a prime mover of the economy, said Raamdeo Agrawal in an interview with Moneycontrol. The Motilal Oswal Asset Management Company co-founder is bullish on the sector and its ancillaries, primarily mortgages along with paint, cement and tiles.
“Where the housing boom is concerned, the biggest boom is mortgages. This is because almost 90-95 percent of people do take out mortgages and the well-run mortgage companies are well consolidated,” Agrawal observed. The veteran investor believes that investors could play through the mortgages as they are poised for sustained growth in the sector.
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“The real estate industry almost went through the very lowest points over the last three years. Just as is in the US, in India too the industry will remain a prime mover of the economy for a very long time, just that it is not very organised,” said Agrawal. However, with the industry now being taken up by the Real Estate Regulatory Authority (RERA), he noted that the sector will become much more organised.
Agrawal believes that 3- 4 percent of India’s GDP could potentially be drawn from the real estate industry in terms of topline. “I think that the sector has a very fair opportunity and it is a large sector,” he said.
Despite the weak balance sheets and poor cash flows of housing companies, Agrawal remains optimistic. “The ancillary companies like paint, cement, tiles, etc. are good plays on the sector,” he said.
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