Real Estate stocks have been hammered and many are trading at 50-70 % discount from highs witnessed few years back. When the markets rallied, real estate did not participate and when markets have fallen, realty stocks have been battered. Most companies have huge debt and are witnessing a drop in sales. Companies have seen poor results due to interest burden on the loans taken. To make matters worse, RBI has hiked rates making loans costlier.But some companies have good land bank. Companies are selling land to reduce debt. Once Eurozone crisis ends, outlook for the sector is expected to brighten. Rate hikes seem to end and RBI may cut rates to spur domestic growth of the economy. Property rates are also expected to appreciate in both tier I and tier II cities. Once the firms reduce Debt burden and boost sales, expect the stock prices to outperform broader markets.
Top picks - DLF and HDIL
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