Andrew Holland Thinks Real Estate Sector Might Just Surprise You

The CEO of Avendus Capital thinks the battered real estate sector is primed for a revival.

Pedestrians walk past apartment buildings in Delhi, India. (Photographer: Ruhani Kaur/Bloomberg)
Pedestrians walk past apartment buildings in Delhi, India. (Photographer: Ruhani Kaur/Bloomberg)

The battered real estate sector may be one of the beneficiaries coming out of the Covid-19 pandemic as work-from-home forces urban Indians to rethink where they live, according to Andrew Holland.

“It wouldn’t surprise me if the real estate sector, going forward, is one of the new themes emerging out of the virus,” Holland, chief executive officer at Avendus Capital Public Markets Alternate Strategies, one of the nation’s largest hedge funds, told BloombergQuint’s Niraj Shah in an interview.

Holland said work-from-home is making people realise that they don’t necessarily need to live in the middle of a bustling city to go about their business. “People are thinking, not just in India but also globally, that do I need to live in the centre of Mumbai? Can I live in the outskirts now because of work-from-home?”

“That just brings a different edge to the real estate sector,” he said.

Besides, favourable policy support from the Reserve Bank of India, will help spur growth in the sector. “It is interesting that one of the sectors that they (RBI) have been focussing on quite a lot on is real state, which has been reeling for many many years now,” he said. “But they seem to be targetting that area as a potential one to get things moving again.”

Real estate may be back on the radar as a part of our investment horizon.
Andrew Holland, CEO, Avendus Capital Public Markets Alternate Strategies
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Another sector that Holland thinks will receive significant attention from investors is pharmaceuticals. According to Holland, the pandemic has created a lot of tailwinds for the pharmaceutical industry and it can now emerge as a “not-just-another-defensive sector”.

Whenever the coronavirus vaccine rolls out, India will play a major role in manufacturing with the help of generic companies too, he said.

Here are other key points Holland made during the conversation:

  • Liquidity, not valuation, will be a driver of the markets. As long as liquidity persists, markets will try and move higher, Holland said.
  • India remains the preferred long-term destination for foreign direct investments and that will have a multiplier effect on the economy.
  • RBI’s liquidity measures have kept the markets buoyant, Holland said.
  • Indian government accelerating spending is the recipe for markets to move higher.
  • Price-to-book ratio is a more reasonable way of assessing companies rather than price-to-earnings during times of uncertainty. The P/E ratio, he said, is skewed by a lot of heavyweights in the stock indices.
  • Markets are hoping to see a continuation of fiscal packages to keep the economy going and people spending until a vaccine is rolled out.

Watch the full conversation here:

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