Gains in real estate stocks are largely due to low valuations in the sector: Deven Choksey

Deven Choksey, MD, KR Choksey Securities in a chat with ET Now shares his views on the real estate sector stocks.

ET Now: Do you think it is too early to write an obituary for real estate?

Deven Choksey: If you look at the valuations of some of the real estate companies, they are quoting below their book values. Irrespective of whether they will fetch the market driven prices of the property that they have, they are quoting below their book values.

So, from this perspective, I would agree that there should be an upside possibility in real estate stocks. Also, look at how the market is operating. Today, ETFs are basically creating a basket of stocks which are undervalued, available at a discounted valuation. They would probably create a basket of such stocks and they would start putting money into such companies. So, now it is turn of real estate because they have been neglected.

Obviously you put some amount of money there and they will shoot up. According to me, this gain in real estate is right now is largely played on the valuation factor. Since the market is offering in different pockets, the valuation advantage, you will see this kind of a phenomena continuing wherein on a rotational basis different sectors and different stocks would become the story of the day in the markets.

If that is the reason, then probably real estate has done it yesterday & may continue for some more time. But it is largely driven by the valuation advantage that some of these companies have right now.