what about the interest servicing on the loan which has to be paid to hold a physical asset? then the rental yield will be considerable low IMHO
Yes it will be low if you take a loan and if you buy a property on loan it won’t make sense as an investment.
Buying physical Real Estate won’t give much returns. I don’t see any sharp Price uptrend.
Real Estate as asset class is transforming from Investment tools to Consumption tool.
Max it shall be Second home or Rental Income Home.
Stable prices are Great for Businesses, Buyers and all Stakeholders.
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What my view is that one can easily have visibility on the future cash flows of a property so they are pretty easy to value using standard DCF tools. Some effort is required to search for a property but in my opinion if you keep at it they do appear on occasion at benign valuations.
As an investment class, i have a favorable view about real estate maybe because i work in that sector. But i can share from my experiences that it can be a lucrative area if one is alert and has adequate money to deploy when the opportunity arises.
The second hand market offers plentiful opportunities to get good rental at reasonable valuations with moderate property appreciation in the offing.
A lot of wealth has been created for common individuals in real estate just that we dont hear stories about them.
Can the forum study GOCL, a hinduja gruop co.and advice.
Attached Press release by co.
gocl.pdf (205 KB)
May be but why are prices not falling then?
I am not sure if there will be a lot of consumers for the prices that flats are asking for at least in the major metros. If consumers are not buying or unable to buy than real estate as a whole and real estate companies will face major challenges to move out from the current cycle of pessimism.
Also, the mindset of younger generation users are changing. I am quoting an excellent article from the LiveMint. Millenials are not too keen on saddling themselves with enourmous debt just to buy a 1000 sqft box(which is essentially what a flat is in my humble opinion).
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Nifty Real Estate Index was among the best Outperformer Sectorial Indices.
RERA, NBFCs crises affected the sector badly and best of bunch will come out of this more strongly.
Sector currently in consolidation mode and it’s on verge of inflexion point.
RERA proved major Gamechanger. Many multibaggrs will come out from this Sector.
Turnaround Sector & Cyclical Play as well
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Mr Market already indicating the same.
Godrej, DLF, Oberoi all successfully raised sizable Money in past one Year.
Few quality Real Estate Stock trading at 52 Weeks high.
Few 5-10 Years high.
Few Life High
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Amazing to see how highly realtors regard Mr. Deepak Parekh and banks in general!
Do you mind sharing the summary?. Also, who conducted this survey?
The survey was conducted by Anarock to gauge consumer sentiment now,48% consider real estate as the best asset class for investment in the current situation.
Link to the report:
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With IT companies mulling at ways for shifting majority of work force under work from home module, which can shift Real Estate sector into darkest of time in coming years.
Recently TCS’s COO said in a press release that by 2025 TCS’s 75% employees will do wok from home
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Quite an insightful article by Frank Knight on home sales during COVID lockdown
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The USA released its housing starts data for July and demand has surged by almost 24%.
Coming back to the topic of real estate cyclicality, a report on the Pune Market can be accessed at https://www.gera.in/media-room/pune-residential-real-estate-reports. The unit that i head,collects the information that goes into the making of this report. We publish a metric called the replacement ratio which tells you where you are in the real estate cycle.
Knight Frank and many others also publish these reports however they should also showcase where we are in the real estate cycle like other commodity products to be of any value. Take for example reports on an unrelated sector like Chlor-Alkali - they go into considerable depth of the demand supply scenario.
Also important information about market share of the top 20 developers in a market etc should also be highlighted to better understand the internal dynamics. All these lacunae in these reports make us think that they do some basic generalization from a a small sample size and hence numbers are not entirely accurate.
I think @Anant and others such as @harsh.beria93 are following the real estate sector can throw some light
Best
Bheeshma
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