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Real Estate
Recent data suggests that absorption (demand) volume in India’s top-7 cities has either been flat or declined over
the past two quarters. Pertinently, lending from the banking sector is slowing down and the new RBI circular would
further affect affordability in the `10mn and above segment. However, we believe that absorption and not price
appreciation will drive residential growth over the next six quarters. New launches have been rewarding for
developers who launched projects at 10-15% discount to the ongoing market rates. Further, high inventory is still
hampering commercial recovery. However, absorption levels have witnessed some uptick in the commercial
segment. We expect rentals to remain firm at current levels with an uptick apparent over the next twelve months.
In the Union Budget, we expect the government to increase the tax limit under Sec 80c from `1lakh to `2-3lakh,
which will lend a boost to the housing segment. Currently, only the township projects avail external commercial
borrowing (ECB) funds. However, the developers’ expect the FDI-compliant projects to be allowed access to the
ECB route of funding.
Re-introduction of tax holiday for housing projects under Sec 80IB is also on the developers’ wish list.
Further, the developers having higher exposure to SEZ’s expect STPI benefits to end by March 2011. Overall, we do
not expect these measures to have a significant near-term impact on our estimates. Hence, we expect the Budget to
be Neutral for the Sector.
Top Picks
HDIL
Anant Raj Industries
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Real Estate
Recent data suggests that absorption (demand) volume in India’s top-7 cities has either been flat or declined over
the past two quarters. Pertinently, lending from the banking sector is slowing down and the new RBI circular would
further affect affordability in the `10mn and above segment. However, we believe that absorption and not price
appreciation will drive residential growth over the next six quarters. New launches have been rewarding for
developers who launched projects at 10-15% discount to the ongoing market rates. Further, high inventory is still
hampering commercial recovery. However, absorption levels have witnessed some uptick in the commercial
segment. We expect rentals to remain firm at current levels with an uptick apparent over the next twelve months.
In the Union Budget, we expect the government to increase the tax limit under Sec 80c from `1lakh to `2-3lakh,
which will lend a boost to the housing segment. Currently, only the township projects avail external commercial
borrowing (ECB) funds. However, the developers’ expect the FDI-compliant projects to be allowed access to the
ECB route of funding.
Re-introduction of tax holiday for housing projects under Sec 80IB is also on the developers’ wish list.
Further, the developers having higher exposure to SEZ’s expect STPI benefits to end by March 2011. Overall, we do
not expect these measures to have a significant near-term impact on our estimates. Hence, we expect the Budget to
be Neutral for the Sector.
Top Picks
HDIL
Anant Raj Industries
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