Stay away from the real estate sector, says Vivek Mavani, Vice President & Senior Portfolio Manager, Brics Securities.
Mavani told CNBC-TV18, "As far as real estate sector is concerned, it is still early to take a contrarian bet. The sector will first see significant dip before it rises back. It is for several reasons. One, is real estate cycle in terms of actual property prices has yet to play out meaningfully. Prices have declined 10-12-15% in most large markets of Mumbai, Delhi, Bangalore, Pune, Hyderabad, etc. "
He further added, "Secondly, in a falling property prices scenario it is more difficult to offload that inventory only with a significant compromise on profits or maybe losses. That whole cycle is yet to play out. Baring a couple of real estate companies most of them are neck deep in debt. Down cycle is not going to anyway help them on their cash flows. The sector is facing issues like, rising interest rate scenario, pressure on property prices, liquidity issues and huge amount of debt on their balance sheet. The sector has yet to play out the down cycle fully. It is early to take a contrarian call but stay away from it."
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