Reforms such as the Goods and Services Tax and the Real Estate Regulatory Act and the government's affordable housing push will benefit large organised players in the residential segment, according to ICICI Securities.
The success of the affordable housing scheme, however, will depend on existing land available and tie-ups for new projects, the report said.
The recovery in the residential real estate market will be gradual and sustainable but a full revival it may take 18-24 months. Office rentals, on the other hand, have already risen over 50 percent in the last three years and select malls have seen renewed traction in footfalls.
Here are ICICI Securities' top picks from the sector.
DLF
- Struggling with residential sales in weak National Capital Region market
- Strong recovery in rental asset portfolio
- Expect annuity income of Rs 3,000 crore in FY18
- Net debt to halve post sale of DLF Cyber City Developers to GIC Singapore
- Unsold ready inventory worth Rs 15,000 crore
Oberoi Realty
- Thane land deal valued at Rs 55 per share
- Revenue traction to pick up in second half of FY18
- Pre-sales and collections impacted by RERA/GST
Godrej Properties
- Expect sales acceleration over the next 12-18 months
- Gurugram and Nodia launches have seen decent pace of sales
- Strong business development with four new projects being added in Q2FY18
Prestige Estates
- Residential development improve over the next 2-3 quarters
- Expect annuity business to remain strong
- Watch out for stake sale in hotel/annuity business
Phoenix Mills
- India's largest mall developer
- Deal with the Canada Pension Plan Investment Board to drive growth
Sobha
- Most positives already in the price
- Strong new launch pipeline for H2FY18
- Do not expect debt reduction due to spending on land acquisition
Brigade Enterprises
- Expect rental income to jump up more than 100-percent
- Hotel portfolio likely to double over next 4-5 years
- Tie-up with GIC to drive growth
Kolte Patil Developers
- Sales momentum to pick up in H2FY18
- Continued focus on an asset light model
- Foray into Mumbai redevelopment
Sunteck Realty
- Completed/ongoing projects expected to generate cash surplus
- Majority land at Oshiwara District Centre, Goregaon, Mumbai
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