Interesting Property Times in January 2014

Mumbai property market to become very interesting in January 2014.

Brace yourself for new launches by Shapoorji, L&T, Lodha and a lot many top real estate developers in the market.

The Year 2013 saw an amazing trend with Developers having a strategy of pre-launching at prices which were way below the under construction property prices and the ready possession stock. Most of the projects launched with strategy by Lodha, Kalpataru, Shapoorji, Omkar and other developers witnessed superb traction.

Year 2014, should see a similar trend with Builders wanting to exit projects with maximum sales at lowest prices, as unlike 2010 – 2011 markets, there are many more projects in the market and at levels of parity in micro locations.

The market of 2013 and 2014 is going to be similar, but the only difference being that in 2014 Second Quarter, we may see a major bounce back of confidence due to the new government.

If you are a fence sitter, do review the situation that Top Developers don’t launch projects every few month. So do not wait thinking too much if you see a Top Developers project launched in your budgets. With 3-5 years possession you are bound to see an upside in most of the New Launches. It may be difficult to see what kind of returns one can expect, but be rest assured, that you will get better returns than any financial product and a quality asset which you can use in future.

Wish you a Great New Year ahead.

Team – Mumbai Property

Mumbai lacks lifestyle apartments today

If you are coming from overseas to buy a property in Mumbai with No Fuss and s real plush looking building then you are in for a real shock today.

The ready possession buildings with Top quality maintenance are a handful across Mumbai.

Recently I was with an Expat family, they looking for an apartment on lease with a budget of around 10000 US Dollars a month. It was a tough experience for me to match their need of a large 4 BHK in Bandra or South Mumbai which would be in Top shape.

Thr apartments available either are too old and need a complete make over or the buildings inside and outside is not so well maintained as it should be to command the price.

We hope that this changes in coming times with the new launches with swank amenities across Mumbai.

A few buildings which qualify today for top expats:

1. Beaumonde
2. Vivarea
3. Imperial Towers
4. Kalpataru Horizon
5. Raheja Bay
6. Narain Terraces
7. Kubilisque
8. Ashok Towers
9. Bellissimo
10. Jivesh Terraces

Oberoi Realty: Strong base

The real estate sector continues to face a number of challenges, and this is the reason that analysts have rated as ‘above estimates’ the 1% net profit growth by Oberoi Realty, a Mumbai-focused builder. Another reason for this enthusiasm is the stable operating numbers. The company’s realisation increased by 8% on a quarter-overquarter basis, despite a 5% fall in volume during the same period. The occupancy rate at Oberoi Mall was stable at 95%, while the occupancy for Commerz also rose marginally to 83%.

Oberoi Realty also has a steady project pipeline in place. It has already received approvals for its Esquire project at Goregaon under the revised development control rules (DCR), and expects to start construction within a few weeks. The Oasis project in Worli has started and the same is expected to reach the 25% construction threshold in 2013-14 itself. However, the Mumbai commercial real estate market is still struggling with oversupply and, therefore, the demand for Commerz II is not as robust as it was for Commerz I. To mitigate the problem, Oberoi Realty is planning to convert some of its commercial projects to residential ones, and this should provide the much-needed visibility for the coming quarters.

The company is also considering foraying into other important markets. To begin with, it is planning to make an investment of 150 crore in the National Capital Region, and additional investments will be on the basis of its success. This implies that success on this front should act as a major trigger for the stock. The firm is still waiting for the environmental clearance for its Mulund project, and any news on that front can be another trigger. As of now, the strong execution history and high-end construction quality differentiate Oberoi Realty from other players. The low-cost land bank—since most of the land was acquired before the recent spiral in prices—is another positive factor for the stock. However, new land acquisition may be at a higher cost and this may dilute the cash holding and higher margins.

Given the strong cash flow and increasing earnings visibility, analysts feel the stock deserves a re-rating. While most real estate stocks have rallied in the recent past due to the expected cut in interest rates, Oberoi Realty underperformed because it is a debt-free company and, therefore, is unlikely to be a major beneficiary of the rate fall. Due to this, the gap between the company and other high debt peers has come down once again, thereby offering a good entry point.

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We pick the stock that has shown the maximum increase in consensus analyst rating during the past month. Consensus rating is arrived at by averaging all analyst recommendations after attributing weightages to each of them (5 for strong buy, 4 for buy, 3 for hold, 2 for sell and 1 for strong sell) and any improvement in the rating indicates that the analysts are becoming more bullish on the stock. To ensure that we pick only companies with a decent analyst coverage, this search is restricted to stocks that have been covered by at least 10 analysts.