The Indian real estate industry is one of the most recognised and talked about sector in the country. The growth of this particular sector is well complemented by the growth of corporate environment and high employment. The demand for office space in urban and semi urban accommodations sets the growth of the economy and business climate in general. The real estate sector comprises four sub sectors: housing, retail, hospitality and commercial. The Indian real estate sector has a market size of US$125 million currently, which is expected to reach a market size of US$1 trillion in the next ten years, contributing to over 12% of the country’s GDP in the next five years. Sectors like the IT and ITES retail, consulting and e-commerce have done quite well in 2018, with high demand for office space. The commercial office space stock in the country is expected to cross the 600 million square feet, while the office space leasing in the top eight cities is expected to cross 100 million square feet during the next few years. The government has been taking several initiatives to encourage the development of the sector and boost employment through the growth of the sector. Some of the major government initiatives and constructing of 6.85 million houses under the Pradhan Mantri Awas Yojana, creating of the National Urban Housing Fund and the implementation of 100 Smart Cities under the Smart City Projects. The Indian real estate sector, particularly in North India, has been facing tremendous pain in the last 5-7 years on the back of defaulting developers, high interest rates, liquidity crisis, etc. There are a handful of Indian real estate players who have done well and stood their ground in the real estate space. Phoenix Mills Ltd is a Mumbai based real estate company listed on the stock exchanges and merits attention to be in any long term investor’s portfolio. The company began operations in 1905 as a textile manufacturing company and later entered the real estate market in Mumbai in 1987. With a huge land bank in the prime Lower Parel area, the company opened India’s first consumption centre called The High Street Phoenix Mall. It houses retail, entertainment, hotels, commercial and residential complexes. The company has been a pioneer in converting mill land into modern, multi use integrated properties. Phoenix Mills posted its Q4FY19 results with top line growing 66% YOY to Rs 723 crore on account of higher revenue collection from the residential sector, while the EBITDA was up 74% at Rs 377 crore YoY and the profit after tax increasing by 147% at Rs 228 crore. The company feels that now the time has come to be a little aggressive in their strategy and hence is scouting for additional space to expand its assets in the commercial portfolio. On the other hand, the retail portfolio is on a steady wicket and generating decent growth, year on year. Given its prime quality of retail and commercial assets, healthy balance sheet and strategic expansion plans, most analysts and fund managers are bullish on the Phoenix Mills stock and expect it to appreciate by over 30% in the next 15 months.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.

 

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