FIIs bet big on real estate stocks

FIIs bet big on real estate stocks
The Times of India, July 28, 2009, Page 21

M Allirajan TNN

Coimbatore: FIIs, who resumed their buying spree after a brief pause in the run up to the Budget, are placing their bets on realty stocks. FIIs, who have net bought equity worth more than $6 billion so far this year, have increased their stakes substantially in top realty companies in three months, boosting prices of stocks in the sector.

FIIs have more than doubled their stake DLF, in the country's top real estate company. FII holding in DLF stands at 15.4% for June, the highest since its listing. FIIs have more than trebled their stake in Unitech, which has raised $900 million between April and June.

BSE Realty index, which is among the top performers in the current rally, gained most last week moving up 13.3% while sensex registered 4.3% increase. The rally was led by DLF, which zoomed 18.3% followed by HDIL and Unitech that gained 15.9% and 14.3% respectively.

"Stock prices (of realty firms) had corrected 90-95% from their peaks. But the latent demand (for property) is still high," says Gopal Agrawal, head, equity, Mirae Asset global investments. "Now, big investors have come in and realty firms have also reduced debt and as a result equity values have gone up."

FII holding in Unitech, the country's second largest property developer have jumped from 5.96% in December to 22.79% in June, the highest exposure in more than three years. FII stake in the top two realty majors has hovered between 6-8% in the past two years. FIIs have also increased their stakes in Indiabulls Real Estate (from 41.73% in March to 61.71% in June), Housing Development and Infrastructure and Orbit Corporation.

“Most of the sector's problems started due to lack of liquidity. But when global liquidity began easing out in early April the risk appetite went up," reckons Sameer Narayan, head, equity, Fortis Investments. Top realty companies are on a capital raising spree to reduce debt levels. They have raised $2.7 billion in stake sale in last few months and others are in the process of raising capital.