MUMBAI: Scrips of several Mumbai-based developers saw an uptick on Friday on the back of the Supreme Court order that freed over 6.4 lakh acres for development in Mumbai by removing the ‘private forest’ tag.
This order is expected to benefit over five lakh residents and developers, such as Godrej Properties, Oberoi Realty, Runwal Group, Nirmal Lifestyle and Athithi Group, which are linked to development in areas bordering the Sanjay Gandhi National Park in Mumbai.
The BSE Realty index outperformed the Sensex by rallying 1.63 per cent from its previous close to settle at 1,212 on Friday, while the Sensex ended the day at 20,514, up only 0.08 per cent from its previous close.
The Godrej Properties stock closed at ?162.5 a share, up about 5 per cent or seven points from its previous close on Friday. The Oberoi Realty scrip also zoomed to shut shop at ?204, up four points or two per cent from its previous close.
Adi Godrej, Chairman Godrej Group, said: “Godrej & Boyce owns approximately 133 acres of land in Vikhroli that will be unlocked for potential development in partnership with Godrej Properties. We already have plans for development in Vikhroli and this will further enhance the scale of development.”
According to analysts tracking real estate stocks, the move is positive as it would help reduce pressure on supply due to projects being stuck at approval stage. However, whether it leads to a long-term improvement in the stock prospects of the concerned realty companies depends on structural or fundamental improvements in the companies concerned and how the demand for real estate shapes up going forward.
Sandipan Pal, Realty Analyst, Motilal Oswal Financial Services, said: “For Godrej Properties the benefit would be limited as it is working on a development management fee model in that area and does not own the land. For Oberoi Realty the benefit would be more since it has been heavily banking on the launch of the Mulund project to achieve sustainable sales and cash flow. If things go well it could get the required approvals in the next two to four months and announce the launch.”
“If other developers benefited by the ruling also announce their launches, then the increase in supply could force a competitive rate healthy for buyers,” he added.