BSE Realty Index Performance

India - The Land of Opportunities

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Performance of Real Estate Companies on Stock Market

Indian stock market has performed very well after its bottom in financial crisis. It has almost more than doubled in 2 years. India is growing very fast and over all GDP growth is very good. Even though performance of the economy is very good and market has also performed well during this two years time.

Real estate is doing very good and prices in all major cities has increased. In some Tier I and Tier II cities the real estate prices has doubled in last three years. If we look at the performance of the real estate companies and BSE realty index, it has performed very poorly. IPO's are not exception, those offered in last 3 years, except Godrej Properties all other are trading below their offer price. Some have lost upto 80 percent of offer price.

The reason are many but most important are the pricing of these IPO and business model adopted by these companies. Most of these companies are high leverage and wanted to go up the scale very fast. The very fast moves and their businessmodel are the most important reason for their performance.

Real Estate Sector in India

Indian real estate has gone transformation in last 10 to 15 years. The landscape has total change. With growing economy and fast growing urban population has changed India's landscape. India is basically country of villages and still 72% of total population lives in rural area. India's fastest growing sector is its services and it has given total new dimension to urban areas. New centers of development are coming.

Bangalore which has become IT capital of India and key export hub has one of the highest number of rich people. Young IT guys earning in millions and spending on life style. It has developed big IT cities and townships housing thousands of employees. These big campuses of IT companies have changed the landscape of India. Not only the Bangalore but Hyderabad and Chennai are not far behind and this has given to the demand in all types of real estate in urban area.

The second fastest growing services are KPO and BPO which are across the nation and newly growing research facilities. All this has emerged as new young India. Shopping Mall - There were just few shopping malls which can be counted on fingers, 15 years ago across country. Today shopping malls, big and very big are coming everywhere, they are gone to tier two cities but they are there in Tier III cities also and looking at town which has good potential.

Young population and demographics has changed. This is young generation demanding new entertainment. Multiplex is new phenomenon. This is one area which has really done great in terms of investment.

New townships and luxury apartments are developed across the country. This is increasing fast. Demographic change and young population along with urbanization is increasing demand for residential properties.

Investment in real estate in India is usually doubled in three years’ time. This is one of the safest and best investment options.

India - Rainbow of Culture

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Market Size and Growth of Real Estate Market

 

Present estimated value of Indian real estate is USD16 billion. Indian Real estate is growth rate is 30% year on year.  Indian real estate is valued at 5-6 percent of GDP. The estimated value of Indian Real Estate Value Chain is around USD 40-45 billion. Investment in real estate is considered as infrastructure investment and will get all benefits of infrastructure project. FDI is allowed in Real estate sector in India and has many benefits. India has seen big investment in this sector. During last few years India has attracted over USD 12 billion.

Residential properties comprise 80% of India’s real estate development. 20% comprising of commercial space, shopping malls, hotels and hospitals. Presently India has 22.4 million units’ shortages. India will need 80 million to 90 million new housing units in next 15 years.

Profitability in the Indian Market

Average profit in construction in India is around 18% which is well above the developed world.

Services sector has grown very fast in last 15 years and are the main drivers of India’s GDP growth. This growth in ITES/IT sectors, along with Telecom which has second highest employment generator, and Pharmaceutical Companies which are engine of world’s generic medicine are the main drivers for the commercial real estate space in India. The growth in Commercial real estate is concentrated in Tier I cities of India.

Residential Real Estate

Presently 28.7 percent of India’s population lives in urban area. By 2030 urban population will increase to well above the 40%. This migration of low and middle income population needs new housing unit and this demographic change will be the main driver of India’s real estate.  India’s Urban Population is about 316 million and will increase to 550 million by 2030. This urbanization will need big investment in urban infrastructure and housing. From 1947 India’s population is grown 2.5 times while urban population is grown five fold over the same period. Mumbai and Delhi will be among first five cities in global ranking by population.

Increasing number of households

With urbanization more and more nuclear families are emerging. The average size of India’s household has decreased from 5.4 to 501 in 10 years.  Because of nuclear families and migration the number of household increased by 40 million in just 10 years.  House hold size will continue to go down in future and will result in more household unit. This will result in more demand for housing units. India has one of the highest younger populations. Presently 700 million peoples are in the average bracket of 16-65 years of age. Average age of home buyers has reduced from 28 years to 28 years in last ten years.

Low-cost Budget Housing

 

India will need 25 million housing units according in NHB in 10th five year plan. According to E and Y the estimates for housing unit is 45 million and 70 percent will be in middle and low income bracket.

• Slum-rehabilitation - India is housing many slums in Tier I cities. Government has special slum redevelopment project for developing slums which are beneficial to the developers also with special incentives. This has very good potential for the long term growth of the real estate in India.

• Mass housing - Urban population is increasing fast and middle income and low income population need major housing. To cater to the needs of this group government is promoting mass housing projects.

India has world biggest slum and government has declared its redevelopment SLR and redevelopment of all slums in urban areas but nothing much has happened and this will remain biggest opportunity in housing in India.

India is still rural country will remain so in future, by 2030 only the 40% population will be in urban areas. This is huge potential for the development.

Tier I Cities

1. Delhi -- This is fastest growing city in India. The national capital region has best urban infrastructure in India's all Metro Cities. Metro Rail became icon of growth and development. NCR has highest number of corporate entities registered in last 3 years. With surrounding Mini Cities and growth areas it has become India's Trading and Manufacturing capital. Noida, Ghaziabad, Gurgaon, Faridabad played very important role in Delhi's rise.

2. Mumbai-- is and always the financial capital of India. Its culture and traditions belongs to cosmopolitan society. It has the most linguistically and culturally diversified population among India’s Tier I cities. It growth was slow in last 10 years. Mumbai faces sever infrastructure problems.

3. Kolkata- was India's biggest and richest city at the time of independence in 1947. It's status as trading hub, as richest city and cosmopolitan has slowly and slowly gone down. Still it is one of top four cities in India and growing. It's population is growing but in terms of business and development it has done as good as other cities in India.

4. Chennai--South India's Crown Jewel Chennai has done remarkably well in all these years in terms it's infrastructure. It has stood it turf as trading hub of south and also become key player in manufacturing hub.

5. Bangalore and Mysore - Bangalore has emerged as India's IT capital. Its growth in terms of IT and services supplemented by manufacturing has made it India's capital of richest. It's nice weather and beautiful green surrounding has helped it in growth and development.

6. Hyderabad – It has strongly emerged as contender for the coveted place of India's IT hub and services capital. It has really done very well in terms of growth and development. The recent development in Andhra Pradesh on separate Telangana has affected this fast emerging city of future.

 

Tier II Cities

Tier two cities are mostly the cities which are state capital and or located very near to the tier I cities. These cities have done remarkably well in terms of growth. These cities have very good potential as growth is getting diversified across the countries. With congestion in Tier I cities these tier II will do well in medium term.

1. Thiruvendipuram - is capital of Kerala. Kerala is most literate state of India. Kerala is NRI driven economy. Kerala has highest number of expatriate population in India. Kerala is known for its natural and beautiful environment. Tourism and IT are two of the important industries of Kerala. But real estate demand is mostly driven by IT, shopping mall and residential apartment. Compared to other part of India Kerala has high disposable income because of its highest number of NRI, it is remittance driven economy.

2. Pune - Pune is 180 KM from Mumbai. It is known for its nice climate and greenery. Pune is part of India's biggest industrial triangle, Mumbai - Pune- Nasik Industrial triangle. Pune University is ranked second in India. Pune is knowledge capital of India. It houses Tata Motors and many other Tata Companies. It has many fortune 500 companies. It is India's first and best and biggest industrial township.

3. Jaipur - City of Maharajah, part of India's Tourist Golden Triangle - Delhi - Jaipur - Agra. Jaipur is one of the most important tourist destinations of India. Every year thousands foreign and Indian tourist came to Jaipur. Jaipur is capital of Rajasthan. Real Estate Market is mainly driven of tourist demand and new IT Companies.

5. Chandigarh - This is only fully planned city of India. Designed and Developed by British Empire pre independence. It is Union Territory. It is capital of two state governments Punjab and Haryana. It is very entrepreneur city with highly educated population. It is developing fast and is the only big city of Punjab and Haryana but does not belong to either of them. Punjab has many industrial towns and industrial hubs, similarly Haryana also has many industrial towns and manufacturing is major area in these towns. Punjab and Haryana are the India's Food supplier. These two states are the part of India's green revolution and produces maximum wheat and rice. Basically these two states has major contribution to the India's self-sufficiency in India.

6. Ahmedabad - Ahmedabad is capital of India's most industrialized state Gujarat. It is also India's most entrepreneurial state where everyone has his own idea of doing business. Gujarat has many big industrial cities and industrial areas. It hosts India's first private port and special economic zone i.e. Mudra Port and SEZ. Baroda and Surat are other big industrial cities. Anand , the city of Amul India's biggest dairy is also in Gujarat.

7. Nagpur - It is Orange City of India. It second Capital of Maharashtra. It is most centrally located city in India. It has best connectivity and shortest average distance from most of the cities. Because of its central location and new VAT system it is fast developing as India's logistic center. It has warehouses and distribution system for many major companies. Looking at its central location Government has also developing MIHAN project which will bring Nagpur as logistic capital of India.

Tier III Cities

These are India's future cities. These cities will emerge on the India's and world's map as destinations of growth and development. These cities have all ingredients of growth and development. India is very big country of more than 28 states and 7 union territories. There are 640 districts in India. India has 62 municipal corporation, these are the towns with more than 2 million population. In the above I have covered many cities are heart of India's real estate development. But there are many more cities which are moving fast and emerging as future of India. Those are as listed below.

BSE Realty Index Performance

BSE Realty Index
BSE Realty Index
BSE Sensex
BSE Sensex

BSE Realty Index Companies

Stock Prices as of
12.04.11
 
Stocks
Price
Change ( Rs /%)
Ackruti City
205.55
0.15 (0.07%)
Anant Raj Inds.
76.05
0.10 (0.13%)
D B Realty
87.4
-1.55 (-1.74%)
DLF
232.2
4.60 (2.02%)
Godrej Propert.
700.35
11.90 (1.73%)
H D I L
159.2
5.90 (3.85%)
Mahindra Life.
377
-0.85 (-0.22%)
Orbit Corpn.
49.55
1.75 (3.66%)
Parsvnath Devl.
42.3
0.70 (1.68%)
Peninsula Land
55.4
1.20 (2.21%)
Phoenix Mills
199.95
-5.85 (-2.84%)
Sobha Developer.
266.5
1.85 (0.70%)
Sunteck Realty
311
-74.15 (-19.25%)
Unitech
36.75
0.65 (1.80%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Realty Companies in India

Unitech Ltd
Unitech Ltd
Akruti City
Akruti City
Anant Raj
Anant Raj
DLF LTD
DLF LTD
Godrej Properties Ltd
Godrej Properties Ltd
HDIL
HDIL
Mahindra Lifespace
Mahindra Lifespace
Orbit Corporation
Orbit Corporation
Parsvanath Builders
Parsvanath Builders
Peninsula Land Developers
Peninsula Land Developers
Phoenix Mills Ltd
Phoenix Mills Ltd
Shobha Devlopers
Shobha Devlopers

Realty IPO Performance

S N
Company
List Date
List Price
Current Price
Issue Price
Change
28
Godrej Properties Ltd
5-Jan-10
510
704.25
490
43.72
60
R P P Infra Projects Ltd
6-Dec-10
75
74.45
75
-0.73
65
MBL Infrastructures Ltd
11-Jan-10
190
170
180
-5.56
66
Oberoi Realty Ltd
20-Oct-10
280
240.3
260
-7.58
72
IRB Infrastructure Developers Ltd
25-Feb-08
170.05
157.15
185
-15.05
83
Prestige Estates Projects Ltd
27-Oct-10
190
142.5
183
-22.13
105
KNR Constructions Ltd
18-Feb-08
180
103.35
170
-39.21
125
Nitesh Estates Ltd
13-May-10
50
26.25
54
-51.39
126
Maytas Infra Ltd
25-Oct-07
480
177.4
370
-52.05
136
Orbit Corporation Ltd
12-Apr-07
90
48.2
110
-56.18
140
DLF Ltd
5-Jul-07
582
221.75
525
-57.76
157
Mundra Port & Special Economic Zone Ltd
27-Nov-07
770
135.45
440
-69.22
161
Housing Development & Infrastructure Ltd
24-Jul-07
567.5
146.85
500
-70.63
164
Kolte Patil Developers Ltd
13-Dec-07
220
41.35
145
-71.48
174
Puravankara Projects Ltd
30-Aug-07
399
94.5
400
-76.38
181
Niraj Cement Structurals Ltd
19-Jun-08
185
39.75
190
-79.08
188
D B Realty Ltd
24-Feb-10
430
85
468
-81.84
191
Kaushalya Infrastructure Development Corpn Ltd
14-Dec-07
67.9
10.8
60
-82
203
IVRCL Assets & Holdings Ltd
16-Aug-07
500
60.7
550
-88.96
204
Gammon Infrastructure Projects Ltd
3-Apr-08
180
17.85
167
-89.31
206
Consolidated Construction Consortium Ltd
15-Oct-07
801
37.15
510
-92.72

India - The Emerging Power

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Comments 7 comments

ZIa Ahmed khan profile image

ZIa Ahmed khan 5 years ago from Kuwait Author

I have written my explanation why these companies performed badly. Read my another hub.

http://hubpages.com/money/Listed-Real-Estate-Compa...


trade4target 5 years ago

I really appreciate your post and you explain each and every point very well.Thanks for sharing this information.And I’ll love to read your next post too.

Regards

http://www.articleforfree.com/articleforfree/Artic...


ZIa Ahmed khan profile image

ZIa Ahmed khan 5 years ago from Kuwait Author

@billioninvestors - As promised my new hub on why Indian Realty Companies performed badly. Basically these the companies who wanted to still investors money.

http://hubpages.com/money/Listed-Real-Estate-Compa...


billioninvestors 5 years ago

You are right Mr Zia Ahmed khan! and i am waiting for your next hub why their performance is bad


pkarnan 5 years ago

kkkk


ZIa Ahmed khan profile image

ZIa Ahmed khan 5 years ago from Kuwait Author

Fundamentally India is strong and economy will do good in mid term. The performance of BSE Realty Index has nothing to do with economy. Real Estate prices has doubled in three years. The problem is with business model of these companies, there is no short cut. I will write in my next hub why their performance is bad.


pkarnan 5 years ago

fundamently india is very strong

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