Bengaluru-based realty stocks mixed after Karnataka government increases guidance value of properties

At around 10:10 am, individually, Brigade Enterprises shares were down 0.11 per cent on the NSE, Puravankara shares were down 0.14 per cent, and Prestige Estate Projects shares traded 0.62 per cent lower.

On the other hand, Sobha Limited shares traded flat, image- Reuters

Bengaluru-based real estate stocks were a mixed bag on Wednesday, September 20, after the Karnataka government made an upward revision in the "guidance value" of properties. The guidance value is the minimum selling price of a property fixed by the government, depending on the locality and type of structure.

At around 10:10 am, individually, Brigade Enterprises shares were down 0.11 per cent on the NSE, Puravankara shares were down 0.14 per cent, and Prestige Estate Projects shares traded 0.62 per cent lower.

On the other hand, Sobha Limited shares traded flat.

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On Tuesday, Karnataka Revenue Minister Krishna Byre Gowda said that the new revised "guidance value" of properties will come into force on October 1. On the whole, the revised guidance value will increase by 25 to 30 per cent on average.

Explaining the revision of the guidance value, the minister said in areas where the market rate and the guidance value are similar, the guidance value has been increased by 10 per cent, and in areas where the market rate is 200 times higher than the guidance value, the revised rate has been increased by 20 per cent to 25 per cent.

What do analysts suggest?

"Prices of properties in Bengaluru are on the rise, and this will further push the rates. The demand for real estate will increase soon, and the upward revision in the guidance value will be good for Bengaluru-based real estate stocks," said independent market analyst Ambareesh Baliga.

Dolat Analysis and Research has reiterated a 'buy' on Prestige Estate Projects for a target price of Rs 900 apiece. The brokerage is also bullish on the shares of Sobha Ltd and has given the target price of Rs 1000 apiece.

"Bengaluru witnessed the highest quarter-on-quarter (QoQ) average price escalation backed by strong underlying demand with year-on-year absorption growth across cities," the brokerage said in its 1QFY24 report.

Bengaluru-based realty stocks: Past performance

All four stocks have outperformed the headline index in 2023 so far: Puravankara Limited has gained over 19 per cent, Brigade Enterprises Limited has surged over 30 per cent, Sobha Ltd has risen over 14 per cent, and Prestige Estates Projects Limited shares have climbed over 29 per cent.

(With agency inputs)

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