Real Estate Investment Through Equities

Let’s say we want to ignore most of the disadvantages of investing in real estate, such as complex legal charges, high taxes, illiquidity and more, but still want to be a part of the growing market. Is it possible? Yes, of course it is, It can be easily  by investing into equity shares of real estate companies.

The average equity has outperformed one of the most renowned Mumbai properties by about 1.25 times, without even considering dividend reinvestment & maintenance outflows. However, investing in Real Estate companies can be risky due to their high gearing ratios coupled with poor corporate governance standards & cyclical nature.

The following graph sets forth sales and deliveries by key developers across India:

Here are a few noteworthy real-estate developers in India (Other than REITs):

A. DLF Limited: Delhi Land & Finance aka DLF Ltd. was founded in 1946 by Chaudhary Raghvendra Singh. The company specializes in construction of apartments, commercial offices, hotels, shopping malls, infrastructure & golf courses, amongst others. DLF’s first residential project was in Krishna Nagar, East Delhi, which was completed in 1949, within 3 years of its establishment. DLF boasts the crown tag of being the most valued real-estate developer in the country.

B. Godrej Properties: Godrej Properties Ltd was established in 1990 by Adi Godrej as a subsidiary of Godrej Industries Ltd. The Company is headquartered in Mumbai, specializing in Residential Buildings, Commercial Complexes and Townships across the length and breadth of the country. 

C. Oberoi Realty Ltd: Oberoi Realty Ltd, established in 1980, is a premium real estate developer based out of Mumbai. A few noteworthy projects include Oberoi Chambers in Andheri, Oberoi Mall in Goregaon, Sky City in Borivali, Three Sixty West in Worli amongst others in the financial capital of India. 

D. Prestige Estates Projects Ltd: Founded by Razack Sattar in 1986, Prestige Estates Projects is headquartered in Silicon Valley. It operates primarily in the residential segment in South India. As of June 2020, the company has completed 247 projects covering 135 million sq. ft. 

E. Phoenix Mills Ltd.: Phoenix Mills Ltd is engaged in the property development business. The company's flagship development High Street Phoenix, Kurla has emerged as the most frequented shopping destination in Mumbai. The company develops malls & has expanded its operations after its initial success to the cities of Pune, Bangalore, Chennai, Kolkata, Lucknow, amongst others.

F. Indiabulls Real Estate Ltd: Indiabulls Real Estate Ltd, founded in 2006, is a global real estate company. The Company’s operations include real estate project advisory, investment advisory, project marketing, maintenance of completed projects, engineering, industrial & technical consultancy, construction & development of real estate properties, and other related ancillary activities.

G. Macrotech Developers (Lodha): Incorporated in 1995, the company founded by Mangal Prabhat Lodha is primarily engaged in residential real estate development projects with a focus on affordable & mid-income housing. It was recently listed on the bourses.