Real estate stocks tumbled on Tuesday after the Budget announcement, but the brokerage firms including CLSA and Nuvama are positive on the sector after the Finance Minister’s announcement to boost urban housing, particularly in the affordable segment. Both the brokerages have cherry picked their favourite realty counters.
In her budget speech on Tuesday, Finance Minister Nirmala Sitharaman announced to address the housing needs of 1 crore urban poor and middle class families, with investment of Rs 10 lakh crore. The government also plans to expand the Pradhan Mantri Awas Yojana (PMAY) by making provision for 3 crore more houses under the scheme, said the FM.
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Allocation of Rs 10 lakh crore for urban housing, which includes Rs 2.2 lakh crore by the central government over the next five years, which will benefit 1 crore urban households. It will include interest subsidy schemes, similar to CLSS, said CLSA in its report.
The government will encourage states with high stamp duties for property registration to moderate these duties. Key cities that have higher stamp duty rates are Haryana and Chennai (7 per cent each) and Mumbai and Pune (6 per cent each), said the brokerage. The government may also consider lowering duties on house purchases by women, it said.
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Sitharaman announced a Rs 2.2 lakh crore initiative aimed at making urban housing more affordable. This funding is intended to support various measures and projects designed to ease housing costs in urban areas. On the other hand, Nuvama Institutional Equities, in its latest report, has said that the housing demand and supply in top cities of country.
Housing demand in India’s top seven cities fell 41 per cent on a monthly (MoM) basis and 29 per cent on a yearly (YoY) basis in June 2024, said Nuvama. “Launches continued to decline. In Q2CY24, demand was up 7 per cent YoY, but supply dipped 5 per cent YoY and 9 per cent QoQ. H1CY24 demand shot up 10 per cent YoY, but supply fell 7 per cent YoY.” it said.
Unsold inventory continued to improve with inventory months falling to 15 in June 2024, from 19 in June 2023. Healthy leverage, increased focus on business development, capital gains benefit in the budget and potential rate cut are some of the factors that are likely to keep the sales momentum intact, particularly for organised developers, said Nuvama.
“Pradhan Mantri Awas Yojna (PMAY) urban allocation for FY25 is at Rs 30,170 crore. This should benefit affordable and mid-income housing players like Sobha, Prestige Estates, Sunteck Realty, Godrej Properties,” CLSA added in its report. On the other hand, Nuvama has picked Prestige Estates, Brigade and DLF as its top picks from realty sector.
The government has announced the construction of an additional 30mn houses under the PM Awas Yojana. Rental housing with dormitory-type accommodations for industrial workers will be facilitated in PPP mode with VGF support and commitment from anchor industries, said SMIFS. This development is likely to aid developers such as PSP Projects, Ahluwalia Contracts, NCC, NBCC.
