Realty scrips dip in London market

Selloff not a true indicator of India real estate story.

Realty stocks may be surging on the domestic bourses, but in the overseas markets shares of most India-focused real estate companies, which raised over £1.2 billion from London's Alternative Investment Market (AIM) last year, are trading at discounts.

This is apparently on the back of hedge funds' sell-off. Experts said international hedge funds, which have pumped money into most of the initial public offerings sensing a big opportunity in the country's real estate market, might have found other attractive avenues resulting their quick exit.

"Companies that have raised funds through long-term investors are faring well as they would like to hold on to their investments," said an analyst tracking the sector. "This (the sell-off by hedge funds) is not an indicator of the real estate story in India. We think the stocks would recover from the slump," he added.

The scrip of Hiranandani's Hirco, which raised £370 million at 500 pence a share, is trading at a discount of 14.10 per cent at 429.5 pence, while shares of the recently listed Unitech Corporate Parks are quoting at a discount of 2.70 per cent at 92.25 per cent compared with the issue price of 92.5 pence.

The sudden loss of interest in the India-focused realty counters in the overseas markets is in sharp contrast to the trend in the domestic markets, where realty companies are the flavour of the season.

Seven of the eight India-focused realty firms that mobilised funds last year are listed on the AIM. Unitech Corporate has given a mind-boggling 2,100 per cent returns in the past one year, while recent listings such as Sobha Developers and Parsvanath have also generated handsome returns to investors. Indiabulls is another stock that has yielded substantial returns on its realty plans.

But not all the scrips on the AIM are faring badly. For instance, the Raheja group's Ishaan Real Estate, which mopped up £180 million at 100 pence apiece, is trading at 105.5 pence, a premium of 5.50 per cent. Similarly, Eredene Capital, which raised £57 million for investments in the Indian realty sector, is quoting at a premium of 15 per cent at 28.75 pence.