CLSA Cuts Oberoi’s Price Target on Unsold Inventory
Oberoi’s midtown project, which will house the Ritz Carlton hotel and luxury apartments, has the highest unsold units among peers
(Bloomberg) -- Oberoi Realty Ltd.’s project in midtown Mumbai, which will house the city’s first Ritz Carlton hotel and luxury apartments, has the highest unsold units among peers and is more vulnerable to the virus-induced economic slump, according to CLSA.
The brokerage said customers are seeking as much as a 15% discount for similar projects amid the pandemic, on top of a 30% fall in Indian luxury home prices over the past four years. It cut its price target on Oberoi Realty to 395 rupees from 403 rupees and retained a Buy rating citing the company’s reputation and ability to acquire land at lucrative prices.
Oberoi Realty’s shares have tumbled 37% this year and were trading at 331 rupees as of 2:38 p.m. in Mumbai on Tuesday. Knight Frank predicts prices of luxury homes in the city will see some of the steepest drops in the world this year as India’s economy heads for a rare contraction.
Oberoi Realty’s project Three Sixty West in Mumbai’s emerging central business district of Worli will consist of two towers, one housing the Ritz Carlton hotel and the other an 85-floor skyscraper with luxury residences with an average ticket price of around 330 million rupees.
It is a couple months away from completion and has about 75% of inventory still unsold, according to CLSA.
Oberoi Realty’s project and location is “far superior” to the others named in the CLSA report, the company’s Managing Director Vikas Oberoi said by text message. And given that the virus outbreak has halted construction and supply of more units, the firm is “very well positioned to sell” its inventory, he said.
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