The real estate space has gone through a time correction starting from 2013 and is attractively priced currently. Also, the oversupply of 2008-2012 appears to be digested as can be seen from the housing demand and supply numbers in the top 7 cities in India. This is likely to lead to less pressure in real estate prices which will ultimately help the housing theme to perform better, says Chintan Haria, Head-Product Development & Strategy, ICICI Prudential AMC.
In an exclusive interview with Sanjeev Sinha, Mr Haria talks about their recently-launched housing theme-based fund and shares his views on what makes him bullish on the housing theme. Excerpts:
ICICI Prudential AMC has launched a housing theme-based fund. What makes you bullish on the housing theme?
We believe housing is at the cusp of a strong cycle. India’s favorable demographics, growing middle class population, increased urbanization, better affordability and lower home loan interest rates are creating a conducive environment for housing and allied themes. Moreover, the government has been trying to stimulate activity in the sector through various supportive measures such as affordable housing, affordable rental housing complex (ARCH) scheme, increase in capex, stamp duty cuts, 100% FDI for townships and settlements development projects, to name a few. India being one of the fastest-growing economies should see strong demand for housing as was seen historically in other developed economies.
Real estate has gone through a down cycle for nearly a decade. Do you think the correction is finally over?
The real estate space has gone through a time correction starting from 2013, a phase when the gains from both lands and buildings were muted. As a result, we believe the segment is attractively priced currently. Also, the oversupply of 2008-2012 appears to be digested as can be seen from the housing demand and supply numbers in the top 7 cities in India. This is likely to lead to less pressure in real estate prices which will ultimately help the housing theme to perform better.
When it comes to portfolio construction, which are the sectors the fund will be taking exposure to?
The scheme has the flexibility to invest in basic eligible sectors that form part of the Nifty Housing Index. Some of the sectors which the fund can invest in include real estate developers, financial services providing housing finance, cement and cement products, consumer electronics, paints, steel, home appliances, and sanitary ware, to name a few.
What should investors keep in mind while investing in a thematic fund like Housing Opportunities Fund?
Apart from the general equity-related risks, since the fund is thematic in nature, there could be periods of up and down cycles. Hence, invest in thematic funds with a long-term view. However, the theme looks comfortably placed over the next five years. It is advisable to consult your financial advisor to know the suitability aspect.
Should investors opt for lumpsum or SIP in this fund?
Investors should look at their overall asset allocation and plan their investments after consulting their investment advisor. During the NFO period (up to April 11, 2022), the minimum application amount is Rs 5000.