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UBS Investment Research
India Real Estate
India still in early stages of development cycle vs. China; but potential exists
„ Insights from UBS’s GCC on how India stacks up vs. China property
India and China offer large development potential from a macro perspective with
similarities being: 1) large housing demand; 2) low mortgage penetration; 3)
growing per capita levels; and 4) growth in infra projects. However, both seem to
be in different stages of their development cycle, with India being in its early
stages.
„ What differentiates China property/companies from India
Our meetings/site visits at the UBS Greater China Conference (GCC) suggest
China scores over India on: 1) scale of construction and timely execution; 2)
regulatory measures of pre-sales on reasonable pre-construction; 3) high disclosure
levels on FSI available and land costs; 4) companies sharing more visibility on
sales volumes/revenue targets and project execution status; and 5) better
accounting disclosures on project revenue recognition.
„ Key challenges that remain
Both are witnessing near-term macro issues on rising rates, inflation, policy risks
(more for China), political issues (India), pressure of rising costs and higher prices
questioning affordability—this seems to weigh on most investors’ sentiments.
„ India lags China, but we see scope for improvements as catalysts
We believe a large part of this gap is due to India’s structural and regulatory
hurdles and believe this large NAV discount differential between India and China
will narrow over time. Structural/disclosure improvements and the likely inclusion
of India in the Asian benchmark property index are potential catalysts for sector
outperformance, in our view.
Q Statement of Risk
We believe risks to Indian real estate include rising interest rates, lack of
regulatory bodies, political and policy risks.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
India Real Estate
India still in early stages of development cycle vs. China; but potential exists
„ Insights from UBS’s GCC on how India stacks up vs. China property
India and China offer large development potential from a macro perspective with
similarities being: 1) large housing demand; 2) low mortgage penetration; 3)
growing per capita levels; and 4) growth in infra projects. However, both seem to
be in different stages of their development cycle, with India being in its early
stages.
„ What differentiates China property/companies from India
Our meetings/site visits at the UBS Greater China Conference (GCC) suggest
China scores over India on: 1) scale of construction and timely execution; 2)
regulatory measures of pre-sales on reasonable pre-construction; 3) high disclosure
levels on FSI available and land costs; 4) companies sharing more visibility on
sales volumes/revenue targets and project execution status; and 5) better
accounting disclosures on project revenue recognition.
„ Key challenges that remain
Both are witnessing near-term macro issues on rising rates, inflation, policy risks
(more for China), political issues (India), pressure of rising costs and higher prices
questioning affordability—this seems to weigh on most investors’ sentiments.
„ India lags China, but we see scope for improvements as catalysts
We believe a large part of this gap is due to India’s structural and regulatory
hurdles and believe this large NAV discount differential between India and China
will narrow over time. Structural/disclosure improvements and the likely inclusion
of India in the Asian benchmark property index are potential catalysts for sector
outperformance, in our view.
Q Statement of Risk
We believe risks to Indian real estate include rising interest rates, lack of
regulatory bodies, political and policy risks.
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