Sobha Developers - Steep discount?


Are there some data points that complement your future perspective about the sector or is made more out of gut feeling? I ask this because I have been tracking this sector for the last couple of years and contrary to popular perception, real-estate demand is much better now (even during COVID times) than what the case was post demonetization. I have also tried studying the longer time real-estate cycles for India (summarized in 2 posts here) and realized that real-estate cycles are typically much longer than other businesses. We have been in this downcycle for around 5 years now, the last downcycle of 1997 lasted for around 6-7 years. The most recent commentary from listed real estate companies saw demand growth coming from premium housing (again contrary to popular perception) and from NRIs. Spark Capital research summarized this by looking at past cycles, basically when there is a macro shock (linked to crude spiral or global demand collapse), INR depreciates and the remittance into the country increases from NRIs. This money then finds its way into real-estate with a ~6 month lag. I haven’t been able to verify this so far, but thats something to definitely look at.

Looking forward to more informed debates about this :slight_smile: