Investors are always looking for an investment theme or a stock that can generate exponential returns over the long term. However, identifying such a theme/stock is no easy task. In some instances, by the time, we realise the potential of a theme, the best parts of the return would have already come by. Off late, one of the trends creating some noise in the markets is the rise in residential sales data. The numbers have not only bucked the general trend but are signalling a change in trend for the housing space in general with housing sales volume across even major cities surging by 113% on a year-on-year basis.
Housing, despite being one of the basic needs after food and clothing, lags in our country. But with rising urbanisation and support from both the State and Central Government in the form of various initiatives, it is projected that the real estate sector in India will reach $1 trillion by 2030. Moreover, by 2025, the real estate sector could contribute as much as 13% to the country’s GDP.
For a sector that has been a laggard for the longest time, the question is what has changed, and will this sustain? The answer to this can be gauged from the factors which are propelling the story this time around.
1) Government measures:
The government is one of the biggest proponents of housing development and has been trying to improve the sector through various supportive measures such as the ambitious PM Awas Yojana. The Budgetary allocation to this scheme has steadily increased from Rs. 2,750 crores in FY22 to Rs. 4,800 crores in FY23. Apart from these, several State Governments in Maharashtra and Andhra Pradesh have initiated stamp duty cuts to stimulate activity in the sector.
2) Higher working population
The term ‘demography dividend’ is often used to describe the favourable demographic structure, which is expected to drive growth in the economy over the coming decades. With India’s median age at 30 by 2030, India enjoys a rare privilege that not many other countries have. This is because in the same time frame, the median age of China is pegged at 37 years, and for the rest of the world is at 32 years. Additionally, the ratio of India’s dependent population to the size of the working-age population is expected to decline, which translates into higher household income. Putting together these variables, a significant boost in housing can be expected.
3) Increase in urban population
Consequent to the rise in the working population, the urban population is likely to shoot up. It is to be noted that only 35% of India’s population resides in cities as of 2020. When compared to the global average, India emerges as a laggard. However, estimates suggest that the urban population will grow five times the growth of a rural population in the years ahead. A higher urban population means that there will be further requirements for office space, hotels, and other establishments.
4) Improved Affordability
Previously seen as a luxury item, people’s perceptions about real estate as an asset class for investment have improved with time as earning power and affordability went on an upswing.
In terms of home affordability, Indian markets are at a decadal high. According to Knight Frank’s Affordability Index 2021, all markets, except Mumbai, are considerably below the 50 per cent affordability threshold. In 2021, Ahmedabad emerged as the most affordable housing market in the country, with a 20 per cent affordability ratio, followed by Pune and Chennai, with 24 per cent and 25 per cent affordability rates. At 53%, Mumbai was the only city with a greater than threshold affordability ratio, although it has improved the most since 2011.
Another factor that aided affordability is the correction in residential prices. For the most part of the last five to six years, home prices in most cities either stagnated or corrected significantly. This made home prices affordable for many individuals when looked at in tandem with the decadal low-interest rate. With India’s job market progressively stabilising, we can expect a portion of household savings to be channelled into buying homes in the years ahead.
All these factors put together show that housing as a theme is set to explode over the next few years. Lower interest rates, the growing trend towards urbanisation, and increased affordability all point to housing being one of the biggest growth areas for at least the next five years.
How can an Investor Benefit from this trend?
One of the easiest ways to capitalise on this opportunity is to invest in a broad housing based thematic mutual fund which has the flexibility to invest across all the sectors which directly and indirectly stand to benefit from the revival in housing. After all, housing is not real estate alone. It encompasses a wide spectrum of sectors such as banks, financing companies, cement, steel, paints, sanitary ware, and consumer durables to name a few. Such funds emerge as a one-stop solution. One such fund is the ICICI Prudential Housing Opportunities Fund.
To conclude, housing seems poised for a multi-year uptick and the easiest manner one can participate in it is through the mutual fund route.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
