BENGALURU, Sept 14 (Reuters) – Shares of realty-to-textile firm Bombay Dyeing and Manufacturing (BDYN.NS) jumped as much as 20% on Thursday on a $627 million deal to sell land, pushing up peers’ stocks on hopes of a pickup in the realty market.
The sale of the 22-acre land in Mumbai to a unit of Japan’s Sumitomo Realty and Development Co (8830.T) would help the company become debt-free, and comes as parent Wadia group faces troubles with its Go First airline filing for bankruptcy in May.
Bombay Dyeing’s stock hit its highest level since Sept. 27, 2018.
The deal, announced on Wednesday, signals investor optimism while the location of the land parcel presents immense development prospects, said Shishir Baijal, Chairman and Managing Director of Knight Frank India.
Shares of Godrej Properties (GODR.NS), Indiabulls Real Estate (INRL.NS) and Oberoi Realty (OEBO.NS) are up between 1.6% and 2.6%, driving the Nifty Realty index (.NIFTYREAL) up 1.6%.
Also helping sentiment was U.S. data showing a moderate increase in consumer prices in August, which cemented expectations that the Federal Reserve will leave interest rates unchanged in September.
The sale will help Bombay Dyeing record a pre-tax profit of more than 43 billion rupees ($518.24 million), and help “extinguish all its borrowings,” the Mumbai-based company noted in an exchange filing.
Bombay Dyeing shares were last up 15.9%. It has more than doubled so far this year, compared to a nearly 37% climb in the Nifty Realty index.
($1 = 82.9725 Indian rupees)
Reporting by Varun Vyas in Bengaluru; Editing by Mrigank Dhaniwala and Janane Venkatraman
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The company logo of construction company Redrow is pictured on a flag at a new housing development near Manchester northern England, April 7, 2016. REUTERS/Phil Noble/File Photo Acquire Licensing Rights
Sept 13 (Reuters) – Redrow (RDW.L) on Wednesday said it expected its profit to more than halve in fiscal 2024, after the British homebuilder posted a 4% decline in annual earnings that was ahead of estimates as the country’s housing sector battles a pronounced slowdown.
The latest warning from a British housebuilder comes as concerns about Britain’s economy and rising interest rates, which have pushed up mortgage borrowing and dampened buyer demand, have dented housebuilders’ profits and build targets.
Recent measures of Britain’s property market have shown house prices falling at the fastest pace since 2009, and a decline in mortgage loan demand.
Data from the Bank of England, which has raised interest rates 14 times since December 2021 in an effort to tame inflation, showed the value of residential mortgages in arrears jumped to the highest level in seven years in the three months to June.
“Whilst the market did partially recover in spring 2023, the further rise in mortgage rates combined with the cost of living crisis means the market remained subdued,” Chairman Richard Akers said in a statement.
Shares in the company slipped 1.7% in early trade.
“Redrow’s FY23 results provide a reassuring statement. The skew in completions and margins for the start of calendar of 2024 implies we may need to wait for the ‘turn’ in earnings reported, but perhaps that we are nearer the turn in expectation,” analysts at Jefferies wrote in a note.
The FTSE 250 firm forecast profit before tax in the range of 180 million pounds to 200 million pounds ($224.2 million to $249.1 million) for fiscal 2024.
The Wales-based builder, which constructs bigger houses than rival housebuilders and sells them to second or third-time movers, posted underlying profit before tax of 395 million pounds for the full-year ended July 2, compared with company-compiled analysts’ consensus estimates of 367 million pounds.
($1 = 0.8028 pounds)
Reporting by Aby Jose Koilparambil in Bengaluru and Suban Abdulla in London; Editing by Rashmi Aich and Christina Fincher
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A view of semi-detached homes in Tilbury, southeast England, May 12, 2014. REUTERS/Suzanne Plunkett/File Photo Acquire Licensing Rights
Sept 11 (Reuters) – British homebuilder Vistry (VTYV.L) said on Monday it will shift its entire focus onto its affordable homes business as a slowdown in the country’s broader housing sector intensifies.
Shares in the builder rose about 11% to a more than one-year high of 893 pence in early trade.
British housebuilders are increasingly feeling the pinch from the Bank of England’s 14 consecutive interest rate hikes, which have hit profit margins and demand as buyers cope with elevated mortgage costs and affordability concerns.
Industry gauges, from mortgage approvals to house prices, have fallen in recent months. Mortgage lender Halifax last week reported a 4.6% annual drop in house prices, the fastest pace since 2009.
Vistry has been working with local government authorities and housing associations to build affordable homes and this Partnerships division has outperformed its Housebuilding unit, which operates on similar lines to rival builders.
“The scale of the social need for affordable mixed tenure housing across the country continues to increase and it is clear that Vistry is uniquely positioned as the leader in partnerships housing,” CEO Greg Fitzgerald said in a statement.
The FTSE 250 (.FTMC) firm said it would merge its Partnerships business with the Housebuilding operations by the end of the 2023 fiscal year to focus on this “high-return, capital-light, resilient” affordable-housing model.
“The shift in strategy removes any doubt about Vistry’s mixed model. It focuses the group on a less volatile part of the
housing market where need is very high,” Peel Hunt analysts wrote.
Vistry had bolstered its Partnerships business with its 1.25 billion pounds ($1.56 billion) acquisition of rival Countryside last September.
The company said it would aim to return 1 billion pounds to shareholders over the next three years and intended to launch an initial share buyback programme worth up to 55 million pounds in November.
Vistry, one of the biggest British housebuilders in terms of the number of homes built each year, reported a drop of more than 8% in adjusted pretax profit to 174 million pounds for the six months ended June 30. It reiterated its forecast for annual pretax profit to exceed 450 million pounds.
($1 = 0.7994 pounds)
Reporting by Aby Jose Koilparambil in Bengaluru and Suban Abdulla in London; Editing by Rashmi Aich and Louise Heavens
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A company logo is seen on a banner outside a Barratt Homes housing development in Warrington, Britain, August 23, 2023. REUTERS/Phil Noble/File Photo Acquire Licensing Rights
Sept 6 (Reuters) – Britain’s largest homebuilder Barratt Developments (BDEV.L) flagged difficult trading conditions over the coming months after it posted a fall in annual profit on Wednesday, as high mortgage rates and a cost-of-living squeeze pummel demand.
Affordability concerns stoked by high mortgage rates and a prolonged cost-of-living crisis have weighed on the UK housing market, with indicators on everything from mortgage demand to construction rates and prices sliding in recent months.
Barratt said the UK housing market remained difficult and the outlook uncertain, adding that it expected average sales sites to reduce by around 6% in the current fiscal year.
The company said forward sales – a key industry metric which gauges housing demand – stood at 2.44 billion pounds ($3.07 billion) as of Aug. 27, down 36% from a year earlier.
The FTSE 100 (.FTSE) listed builder said its pre-tax profit was 884.3 million pounds for the year ended June 30, compared with a company-compiled analyst consensus of 882 million pounds.
British house prices in August were 5.3% lower than a year earlier, their biggest annual decline since July 2009, mortgage lender Nationwide said on Friday.
The number of house purchases in Britain this year is on course to drop by 21% to its lowest since 2012, property website Zoopla forecast last week.
“Whilst we expect that the backdrop will continue to be difficult over the coming months, we are a resilient business with a strong balance sheet,” CEO David Thomas said in a statement.
“We continue to expect a moderate recovery in FY25 and expect further recovery the following year with our new FY26 estimates,” analysts at Credit Suisse said after cutting their 2024 earnings-per-share estimate on weaker margins and higher expenses.
($1 = 0.7950 pounds)
Reporting by Aby Jose Koilparambil and Yadarisa Shabong in Bengaluru and Suban Abdulla in London; Editing by Subhranshu Sahu and Christopher Cushing
Our Standards: The Thomson Reuters Trust Principles.
A view of semi-detached homes in Tilbury, southeast England, May 12, 2014. REUTERS/Suzanne Plunkett/File photo Acquire Licensing Rights
Sept 5 (Reuters) – Investors in British housing stocks will be eager to glean insights on demand and selling prices as some of the country’s top homebuilders start issuing earnings reports or trading updates this month.
High mortgage rates and a prolonged cost-of-living squeeze have hammered UK housing demand over the past few months, making it the worst period for the industry since the 2008 global financial crisis, barring the lockdown-hit 2020.
Barratt (BDEV.L), the country’s largest housebuilder and a sector bellwether, will report annual results on Wednesday and is expected to brief the market on the sales trend and average selling prices in the first eight weeks of fiscal 2024.
“Forward sales guidance will be watched closely given the tricky economic environment,” Hargreaves equity analyst Matt Britzman wrote in a preview note.
“Investors will also be keen to see what’s happening with average selling prices. They were being pushed higher by an increased proportion of London completions,” Britzman said.
Berkeley (BKGH.L) will publish a trading update on Friday.
THE CONTEXT
Dwindling home-booking rates, tapering margins and uncertainty around interest rate hikes have forced housebuilders to slash profit forecasts and trim yearly housebuilding goals, amid desperate attempts to revive demand through a flurry of incentives.
British house prices in August were 5.3% lower than a year earlier, their biggest annual decline since July 2009, mortgage lender Nationwide said on Friday.
The number of house purchases in Britain this year is on course to drop by 21% to its lowest since 2012, property website Zoopla forecast on Wednesday.
Mid-cap builder Vistry (VTYV.L) will post half-yearly results on Sept. 11. Redrow (RDW.L) will report on Sept. 13.
FUNDAMENTALS
** Barratt expects annual profit to fall by a fifth, while house-build targets are seen falling 25% for the 2024 fiscal.
** Berkeley has guided to a 25% slump in annual volumes, but said it was confident of meeting its profit targets for the 2024 and 2025 fiscal years.
MARKET SENTIMENT
** Of the 19 analysts covering BDEV, 10 rate it “buy” or higher, 9 rate it hold; median price target of 495 pence
** Of the 18 analysts covering BKGH, 10 rate it “buy” or higher, four rate “hold” and four rate “sell”; median price target of 4,350 pence
Reporting by Aby Jose Koilparambil and Yadarisa Shabong in Bengaluru; Editing by Anil D’Silva
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SYDNEY, Sept 1 (Reuters) – Australia’s home prices rose in August for a sixth straight month as a jump in new listings was absorbed by strong demand, adding to signs that the recovery in the property market is becoming entrenched.
Data from property consultancy CoreLogic showed on Friday prices nationally rose 0.8% in August from July, accelerating from a rise of 0.7% in the earlier month. Since finding a floor in February, national prices have risen 4.9%, following a 9.1% decline from their peak in April last year.
The recovery has been led by Sydney and Brisbane where prices jumped 1.1% and 1.5% respectively.
Regional markets, where there is usually less demand from overseas migration, eked out a gain of 0.1% in August, while the housing values in capital cities across states and territories rose 1%.
The Reserve Bank of Australia (RBA) has jacked up interest rates by a whopping 400 basis points since May last year to tame inflation, but housing prices found a bottom earlier than expected due to short supply and surging migration levels.
Markets are wagering the tightening cycle might now be over, with another hike priced at only a 40% chance. That expectation has also underpinned gains in the property market.
CoreLogic research director Tim Lawless attributed the gains to lower-than-average advertised supply levels.
“The balance between advertised supply and demonstrated demand will be a key factor influencing housing market outcomes in spring,” said Lawless. “A rise in fresh supply without a commensurate lift in purchasing activity would likely take some heat out of the pace of capital gains.”
There are also signs that rents, which have risen for a 36th consecutive month and added to inflation, may be peaking. National rents rose 0.5% in August, the smallest gain since November 2020, according to CoreLogic.
Reporting by Stella Qiu; Editing by Lincoln Feast.
Our Standards: The Thomson Reuters Trust Principles.
Construction workers break ground to build new homes while building material supplies are in high demand in Tampa, Florida, U.S., May 5, 2021. REUTERS/Octavio Jones Acquire Licensing Rights
BENGALURU, Aug 30 (Reuters) – A short U.S. housing market correction is now over, according to property analysts polled by Reuters who have wiped out forecasts for a price fall this calendar year but also look for stagnation in 2024 despite expectations for interest rate cuts.
After the Federal Reserve rapidly raised the federal funds rate from near-zero to a range of 5.25-5.50% since March 2022, mortgage rates are at their highest and applications at their lowest in over two decades.
But demand for housing has held up, much like in the broader economy, which is now expected to skirt recession, meaning rates are likely to stay higher for longer.
After falling nearly 7% from a cycle high in June 2022 – well short of predictions made late last year for a 12% peak-to-trough fall – average house prices started rising again in February and are now only around 1% below their peak.
As a result, average house prices as measured by the S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas are now forecast to end this year unchanged, according to 30 analysts polled by Reuters Aug. 15-30.
“While we expect house prices to lose some of their recent momentum, the worst of the correction appears to have passed and we don’t expect further sustained declines,” said Andrew Burrell, chief property economist at Capital Economics.
The latest 2023 median forecast compares with a near-3% fall predicted in a May poll, a 4.5% fall in March, and a 5.6% drop forecast in December last year, marking the third consecutive upgrade even as interest rates rose more than expected during that time.
Average house prices were forecast to stagnate in 2024 despite predictions for a rate cut by the middle of the year.
The 30-year fixed mortgage rate was expected to average 6.7% this year, the highest since 2001, and slip to 6.3% in 2024. Those were upgrades from 6.2% and 5.5% in the May poll.
Sharp rate rises over the past year have led many existing home owners who locked in cheap mortgages from a long period of near-zero rates to stay put. That has restricted available supply and with it, housing turnover.
Mortgage rates on offer from lenders may never again rival some of the rock-bottom post-financial crisis and pandemic-era deals, which in the U.S. have multi-decade maturities.
“Home sales volume is being held down by a lack of inventory for sale, which is due to would-be sellers not wanting to give up their low mortgage rate…It is real, and it is going to remain a real factor through 2024,” said Brad Hunter of consultancy Hunter Housing Economics.
Existing home sales, which comprise about 90% of total sales, are currently running at an annualized 4.07 million units, a six month-low.
They were forecast to average 4.17 million units in the second half of this year, lower than 4.27 million in the previous poll.
Despite a near 45% pandemic-era rise in house prices and the market starting to climb again, respondents were equally split on what would happen to purchasing affordability for first-time homebuyers over the coming year. Fourteen of 28 said it would worsen and the rest said improve.
Rents, currently one of the main drivers keeping inflation above the Fed’s 2% target, were expected to fall over the rest of this year, according to 15 of 27 respondents to an additional question. The rest said rents would keep rising, including two who said significantly.
“We have already reached a trough for rent growth, and rents are now rising again on a month-over-month basis,” Hunter added.
(For other stories from the Reuters quarterly housing market polls:)
Reporting by Prerana Bhat and Indradip Ghosh; Polling by Pranoy Krishna; Editing by Ross Finley and Sharon Singleton
Our Standards: The Thomson Reuters Trust Principles.
[1/2]A newly constructed home available for sale is pictured in a new housing development area in Vista, California March 20, 2012. REUTERS/Mike Blake/File Photo Acquire Licensing Rights
Aug 23 (Reuters) – Sales of new U.S. single-family homes rose in July, as an acute shortage of existing homes drove buyers to new units.
New home sales shot up 4.4% to a seasonally adjusted annual rate of 714,000 units last month, the Commerce Department said on Wednesday. The sales pace in June was revised to 684,000 units from the previously reported 697,000 units.
Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, would rise to a rate of 705,000 units.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market. They, however, can be volatile on a month-to-month basis. Sales increased 31.5% on a year-on-year basis in July, the largest annual rise since April 2021.
The median new house price in July was $436,700, a drop of 8.7% from a year ago. The annual price decline in July was the largest since April, which was the biggest drop in three years.
The inventory of existing homes is near historically low levels as mortgage rates hit the highest levels since 2000, dissuading existing home owners who are locked into low rates from putting their homes on the market.
The shortage of existing home inventory is pushing potential buyers towards new houses and driving a flurry of new construction.
At the same time that the median price for new homes fell, the median home price for existing homes increased on an annual basis in July, according to a report released on Tuesday, as the shortage of properties offset the impact of high mortgage rates that had dampened demand in prior months.
Despite the relative strength of new home sales, the combined rate of both new and existing home sales is the lowest since January. Existing home sales constitute the majority of the market.
Tepid home sales volume, in tandem with record-breaking mortgage rates, the renewed house price appreciation and an acute supply shortage, could complicate the stability of the overall housing market.
Home prices were initially the most sensitive to the Federal Reserve’s interest rate hikes – the U.S. central bank has raised rates by 5.25 percentage points since March 2022 – but have stabilized after falling into recession and are still adding significant upward pressure to overall inflation.
New home sales in the Midwest increased 47.4%, the biggest rise on a monthly basis since September 2010. They also rose 21.5% in the West, a region that has experienced the most significant price declines in the past year. They fell by 2.9% in the Northeast and by 6.3% in the densely populated South.
There were 437,000 new homes on the market at the end of last month, up from 428,000 in June. At July’s sales pace it would take 7.3 months to clear the supply of houses on the market, down from 7.5 months in June.
Reporting by Safiyah Riddle; Editing by Paul Simao
Our Standards: The Thomson Reuters Trust Principles.
TOKYO, Aug 9 (Reuters) – Japan’s Sony (6758.T) logged a hefty drop in first-quarter profit, hurt in part by a weaker performance from its movie division but the entertainment giant remained hopeful about prospects for a record year for its PlayStation 5 console.
Operating profit slid 31% to 253 billion yen ($1.8 billion) in April-June, in line with estimates and also pulled down by lacklustre results from its financial business which had benefited from a property sale in the same period a year earlier.
Profit at its movie division plunged by two-thirds due to lower sales for television content as well as higher marketing costs after the company released more films in theatres.
Sony trimmed its annual sales forecast for the unit by 3% citing the impact of strikes by Hollywood writers and actors, which have affected production of scripted television shows and films.
Once a consumer electronics giant, the conglomerate has transformed itself to focus more on entertainment, developing movies, music and games.
Sony has said it expects to sell 25 million PlayStation 5 consoles this financial year, in what would be a record for a PlayStation device, following the easing of supply chain snarls.
Sales have so far been weaker than expected but the company said promotions starting in July are helping sales momentum.
[1/2]An employee of the consumer electronics retailer chain Bic Camera works at the promotion display of the Sony PlayStation 5 game console and its gaming software, ahead of the game console’s official launch, in Tokyo, Japan November 10, 2020. REUTERS/Issei Kato/File Photo
“We believe that there is ample possibility for us to catch up,” Sony President Hiroki Totoki told reporters.
Cumulative sales of the console have topped 40 million but the company lacks high-profile upcoming first-party titles.
Nintendo last week reported it has sold 18.5 million units of “The Legend of Zelda: Tears of the Kingdom” since its release in May, helping drive sales of its aging Switch console.
Sony is also a leading maker of image sensors, which are used in cameras.
The conglomerate had expected a gradual recovery in the smartphone market from the second half of the current financial year but now thinks it will not happen until 2024 at the earliest.
Sony maintained its forecast of a 10% decline in operating profit for the full year.
In May, Sony said it is examining a partial spin-off of its financial unit, which includes life insurance and banking, as it looks to invest further in its entertainment businesses.
($1 = 143.1300 yen)
Reporting by Sam Nussey; Editing by Edwina Gibbs
Our Standards: The Thomson Reuters Trust Principles.
file photo: A logo of the autonomous driving technology startup Pony.ai is seen on a screen during an event in Beijing, China May 13, 2021. REUTERS/Tingshu Wang
BEIJING, Aug 4 (Reuters) – Autonomous vehicle technology startup Pony.Ai on Friday said it would set up a joint venture with Japan’s Toyota Motor (7203.T) with an investment of 1 billion yuan ($139 million) to mass produce robotaxis.
The new company, which will also involve Toyota’s joint venture with Chinese state-owned Guangzhou Automobile Group (GAC) (601238.SS), will be established this year and will see GAC-Toyota produce cars that will use Pony.Ai’s ride-hailing software, Pony.Ai said.
The venture marks a new development in the partnership between Pony.Ai and Toyota, which first teamed up in 2019. In the years since, the Japanese automaker has invested hundreds of millions of dollars in Pony.Ai.
Pony.Ai, which has offices in China and the United States, has launched robotaxi services in Beijing and Guangzhou.
Toyota last month said it planned to accelerate local design and development of “smart cockpits” that meet the needs of the Chinese market, as part of a broad pivot to electric vehicles as it seeks to catch up with increasingly aggressive local rivals.
($1 = 7.1806 yuan)
Reporting by Beijing newsroom; Writing by Liz Lee; Editing by Tom Hogue and Christopher Cushing
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