Remember the good old days of 2005-06-real estate was sacred and so were land banks. Realtors piled in like mad men and HFCs and Banks financed them like hell. Well today no one wants Land, Apartments, Gold, Silver and Platinum. Things are getting so bad that the Unitech scrip-a heady Rs 65000 in 2006 and Rs 350 adjusted for Bonus and stock split is worth Rs 6 today-a new life time low. The one saving grace-all Gurgaon NCR realtors use spare land to host marriages and the entire money is taken in cash. So marriages may get cheaper this season if Realtors begin to fall over each other. Who else will fall over are the guys, investors, lenders, HFCs which have over exposed themselves to Realty. They will get a reality shock, evn if they have not got one by now.
Real Estate To Fall Big Time, Says Ambit. The Data Seems To Agree. A big Ambit report is doing the rounds – they predict that real estate will fall big time <http://reports.ambitcapital.com/reports/Ambit_Economy_Thematic_RealEstate_14Jul2015.pdf> . We are seeing a broad-based real estate pullback, with prices correcting in most tier-1 and tier-2 cities alongside sharp drops in transaction and new launch volumes. The drivers for this slowdown are a mix of supply-side factors (banks have pulled back lending to developers) and demand-side factors (the Black Money Bill has created fear amongst speculators). The result is not just a drop in demand for building materials and challenges for lenders with big mortgage, LAP and housing finance books, but also a generalised slowdown in GDP growth, as the sector which drives 50% of India’s capex and 30% of its jobs conks off. The drivers, they say: - Heavy inventory (Mumbai and Delhi have over 10 quarters of unsold apartments) - Property prices are falling in Tier 2 cities as well - Foot falls at registration offices have fallen - Banks have cut lending to RE esp commercial RE - Subsidies have been cut, so pilfering and parking in RE has been curtailed - Squeeze on black money through the black money bill - Rise in the “guidance value” rates that increase the “white” component of a purchase Some Good Charts ICICI has the most exposure to RE: [image: image] <http://capitalmind.in/wp-content/uploads/2015/07/image27.png> Indiabulls housing has the highest relative LAP (Loan against Property) portfolio: [image: image] <http://capitalmind.in/wp-content/uploads/2015/07/image28.png>India has one of the highest spreads between rental yields and interest rates: [image: image] <http://capitalmind.in/wp-content/uploads/2015/07/image29.png> Our view:A Fall is on the Cards We have been noticing a slow down in real estate for around a year now, and it’s looking rough. From our own research (anecdotal, though): - Prices in Delhi and Gurgaon are down or falling. Transactions have fallen a lot - Bangalore, too, is seeing cooling off. Our recce trips to a few sites show us deserted marketing offices and desperate salesmen. - Real estate credit is still a huge part of all new credit lent out by banks, and that percentage has been increasing. A fall will hurt banks a lot: - [image: image] <http://capitalmind.in/wp-content/uploads/2015/07/image30.png>Real estate companies are already in the dumps. - Cement sales have fallen big time. ACC <http://snap.capitalmind.in/#/nse/ACC> results showed a drop of over 40% in results and we expect Ultratech results to be bad too. - This will hurt companies like the ceramics giants, home loan financiers etc as well. - But if there’s a bust it will be a slow train wreck, rather than one mega fall. This is macro, so it’s slow by definition. -- Kindly email stock reports at STOCKRESEARCHER@googlegroups.com For sharing knowledge -- NIFTYVIEWS.COM NOW A FREE OPEN SOURCE WEBSITE. http://www.niftyviews.com/ Disclaimer :- "The opinions expressed by the members on this board are based on their individual experience and perceptions and to share information with other members with the best of intentions to help fellow members in investment decisions as equity investment is a risky venture.The administrator of www.Niftyviews.com just provide a platform for the authors to express their opinion and take no guarantee for the genuineness of the same."ANY member of this forum doesnt prepare or publish any research report; or ii. provide research report; or iii. make 'buy/sell/hold' recommendation; or iv. give price target; --- You received this message because you are subscribed to the Google Groups "Niftyviews.com" group. To unsubscribe from this group and stop receiving emails from it, send an email to stockresearcher+unsubscr...@googlegroups.com. For more options, visit https://groups.google.com/d/optout.
