Hi Alchemist,

Is it advisable to start collecting scrips over next few months/year in the Real Estate Sector? I think with further more downside the sector will become attractive with long term point of view especially with companies now starting to focus on MIG housing where the margins are less but generate good cash flow & volumes.

Also will the mid-cap companies like Sobha, Purvankara beat Unitech & DLF combine?

Awaiting your analysis.

Thanks in advance

Real Estate sector is going from bad to worse..I started buying unitech when it was at 298...It started going down..Unitech was already badly brutalized at that stage...So i started buying it at 250 assuming that the stock wont go down any further...Right now i have 150 shares at an average price of 275...
I wanted to buy Unitech now to average again but all funds are blocked..Is there a way up for Unitech in near future or buying unitech now to average is my best option??

Ever since the DLF IPO, I have been cautioning investors to be careful with real estate stocks.

I still don't think this is the right time to buy into this sector.

I must have mentioned this a few times on this forum and again I repeat it.

Real estate is highly cyclical in nature and the cycles are much stronger than stock market cycles.

A bad period in real estate means a really bad period. The sales of a real estate company may halve and become just a small fraction when the cycle turns down.

This is what is happening in the real estate sector right now.

The companies are just not able to dispose their properties.

If they can't sell, they don't have fresh cash to invest in future projects.

I have no doubt that real estate is a great sector to invest for the long-term (5 years+).

However, getting into the sector at the peak would mean that investors will not see their purchase price for a long time.

Slowing growth, high inflation and higher interest rates are going to create a lot of problems for the sector in coming quarters.

Buy as much real estate stocks as you want, but do it when the sector becomes the most hated sector.

DLF is now actually below its IPO price. I am not sure about how low it will go, but it seems it has a lot more downside.

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hi alchemist,

thanks for the detailed reply...as ever you are showing the way.

regards,
hiren

Alchemist, will this give a boost to housing finance companies?
Source

barely.

the effect will be like lowering interest rates for loans up to 10 lac on homes priced below 20 lac.

how much are people going to save from this change?

hardly anything.

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