[T.S.R:18070] Re: Fw: {www.abnstocks.in} Real Estate-Sell Sobha, Jaypee Infra (BOAML)

FYI

On Mon, Nov 28, 2011 at 5:15 PM, Indinomics <indinomics@gmail.com> wrote:

Dear Rajivji,

Please share the Jaypee Infra report & oblige.

With warm reg,

Indinomics

Sent on my BlackBerry®

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From: Rajiv Handa <rhapositive@gmail.com>

Sender: abn-stocks--trading-ideas@googlegroups.com

Date: Sun, 27 Nov 2011 19:14:10 +0530

To: <growell@googlegroups.com>

ReplyTo: abn-stocks--trading-ideas@googlegroups.com

Subject: {www.abnstocks.in} Real Estate-Sell Sobha, Jaypee Infra (BOAML)

Agrees with our Bangalore arguments

Mr. Anuj Puri, Country Head, Jone Lang JaSalle, agrees with our bearish view on the Bangalore residential market over

next 12 months on three fronts. 1) With the movement of the airport, large parcels

of land have become available for development offering wider choice to

consumers but suppressing the pricing power in the hands of developers. 2)

Bangalore residential prices have appreciated by only 8-8.5% annually over the

last decade. 3) At current market prices, residential development does not offer

attractive margins to developers, given the rise in input costs over the last 2-3

years.

Commercial holding strong

Anuj opined that the commercial sector in select locations is holding strong with IT

majors looking to add head count and financial services looking at consolidating in

prime projects at attractive rentals. Areas such as Gurgaon (NCR), ORR

(Bangalore) and BKC (Mumbai) are witnessing robust client enquiries and

continue to maintain low single digit vacancies. Anuj confirmed that his tenant

representation business has a decent lease pipeline and none of the major clients

have held back their future leasing plans in the last couple of months.

Mumbai prices might not correct in a hurry

Although Anuj agrees that Mumbai residential absorption has been falling and

developers are being starved of capital, he believes there is little ready inventory

in the market to necessitate price corrections in a hurry. He does not agree that a

10% discount can be termed as the beginning of a crack in the market. The

current clean up exercise of regulations by the government should help Mumbai

real estate sector in the longer term.

He likes Gurgaon; so do we

Anuj prefers Gurgaon over other major hubs on four accounts: 1) well diversified

development across asset classes – office, retail and residential; 2) considerable

end-user demand due to existing commercial stock; 3) improving infrastructure,

vicinity to the airport; and 4) fair mix of residential options - luxury to affordable.

Buy: Oberoi; Underperform: Sobha, Jaypee Infra

Based on our conversation with Mr. Anuj Puri, we continue to like companies with

exposure to (a) real estate markets expected to witness minimal price correction

(Gurgaon) and (b) the commercial real estate space. BUY OBEROI. Unlike

consensus, we see price and volume disappointments over next 12 months in

Bangalore (U/p Sobha and Puravankara) and Noida (U/p Jaypee).

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

 

Nothing in this article is, or should be construed as, investment advice.

 

 

 

 

 

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