$23bn fund sees more gains in costly Indian developers

Bloomberg

Property developers’ shares have beaten every industry group in India this year, drawing criticism from some analysts who say the gains are overdone. V. Srivatsa, a fund manager at the $23 billion UTI Asset Management Co., sees it differently. There’s more juice left in real-estate stocks as steps taken by the government to aid the industry that was one of the worst hit by last year’s cash ban start to take hold.
“The sector could be in an up-cycle in a year from now, and generally the
up-cycle lasts for three to four years, ” he said. “I would say the best is yet
to come.”
The market opportunity for developers is huge, Srivatsa said, as the government’s push to bring homes to India’s 1.3 billion people sparks a boom that CLSA India Pvt. estimates could reach $1.3 trillion in the next seven years. Affordable housing is “one of the most straightforward bull stories in Asian equities,” the brokerage’s Chief Equity Strategist Christopher Wood said.
Indian real estate, historically a conduit for unaccounted cash, was hit by the move to scrap high-value notes last November. The government broadened reforms this year to boost home buying under a plan launched in June 2015, which aims to build 50 million urban and rural homes by 2022.