Real Estate Bill Triggers Buying in personal effects Stocks

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The Cabinet’s sanction to the corrected Real Estate Bill, 2015 led to a rally in real estate stocks on Thursday. Analysts said the passage of the Bill, which covers both residential and commercial real estate, could lead to a re-rating of the domestic real estate sector.

The realty sub-index on the Bombay Stock change outmatch the broader markets, rising over 1 per cent as compared to flat trade in Sensex and Nifty.

Orbit Corp and Unitech was the big gainers, rising 3-4 per cent. HDIL, Anant Raj, NBCC and Sobha Developers promoted 1-2 per cent. DLF, India’s big realty firm, rose 1 per cent.

According to IndiaNivesh Securities, the Real Estate Bill will boost consumer assuredness and help the personal effects industry attract foreign direct investment.

Developers will have to register projects with a real estate regulatory authority (RERA) once the Bill is passed. This will lead to normalization of the unorganised real estate market, analysts say. The law of fines on buyers for be mistake on payment will also benefit developers, analysts said.

Approvals, passing of plans, carpet area, built-up area — all these information will be available to consumer. Nothing would be hidden, that is the principle aspect of the Bill.

The growth in deposit for project making money in escrow account to 70 per cent from 50 per cent is likely to weigh on developers, analysts say.

Mr Hiranandani, the law of higher deposit in escrow account will growth troubles for real estate companies still bogged down by unsold inventories and sluggish demand.

IndiaNivesh Securities said the new stiff penalties shall be a negative for the developers not doing clean businesses and benefit companies like Oberoi Realty, Nesco and Ashiana Housing which still practice clean businesses.

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