>India Real Estate (UBS)

Green Green shoots of recovery

■ From the registration offices: Gurgaon and Mumbai increased MoM New registrations for March 2009 in Mumbai rose 30% MoM (down 33% YoY), possibly the first real MoM increase since October 2008. In FY09, total registrations were 45,580, 30% less than in FY08. March 2009 volumes in Gurgaon grew 19% MoM (the first real increase since July 2008). In FY09,
Gurgaon registered a YoY decline of 5%. In FY08, March witnessed a sequential decline MoM. Hence, we think seasonality is not a factor for the MoM increase in March 2009.

■ Based on JLL REIS survey—absorption up QoQ Based on the sample survey conducted by JLL REIS, absorption of apartments, ie actual sales of apartments, likely grew during Q109. The national capital region (NCR) recorded sales of 4,491 apartments, up 11% QoQ, during Q109, while sales in Mumbai were flat at 740. We note that sales were highest where price cuts were
around 30%. Where the price cuts have been lower, inventory is taking more time
to clear.

■ Expect further price cut to flush out inventory As discussed in our note, India Real Estate: Inventory Check-II, published on 3 April 2009, inventory levels are still high in most cities, and price cuts are helping, in our view. The sales pick-up has come in earlier than our forecast of Q3/Q409 though we did expect the stocks to re-rate earlier. We still think existing inventory
will be cleared only by Q3/Q409 if price cuts continue.

■ Valuation: Buy ratings on IBREL, UT We maintain our Buy ratings on IBREL and Unitech. We maintain our Sell/shortterm Sell rating on DLF. We believe the key risks remain macro recovery risks, and the availability of credit.

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