Real Estate in 2009 : Stocks to Avoid in 2009

2008 has been a bad year for US Real Estate. Many, like me, may be wondering what is the future of real estate and realty stocks in 2009. Should you buy a home in 2009 taking advantage of low prices? Or would it be better to wait for them to drop further? Real estate stocks are at level never ever imagined until Dec 2007. Are they a good for long term investment now or do they still have the potential to wipe out your capital by dropping further?

Indian Real Estate in 2009

Personally, I feel 2009 is going to be the worst year for real estate, worse than many of us have ever seen. I would postpone any house buying decisions, or investments in real estate stocks.

In the US, the economic wildfire which initially started under the name Subprime Crisis, has now spread to a lot of other areas. 2009, is expected to be particularly bad for US commercial real estate according to CR. Well, not just for the commercial real estate though. With US Job market getting weaker and weaker and as unemployment numbers keep rising, almost all kinds of real estate are to be hit.

In India, several parts have already seen a drop in prices. However the full fledged effects on Indian real estate will only be apparent by 2010. Job market in India will get hit harder in 2009 due to job layoffs around the sector. For this reason, that I have decided to completely avoid any long term investment in real estate stocks for 2009. Yes, I may make some short term trading decisions keeping strict stop losses. But no more buy-and-keep approach towards any of the real estate stocks. Not until the end of 2009.

Here is a list of some stocks you may wish to avoid if you share my grim outlook for Indian Real Estate in 2009.
  1. DLF
  2. HDIL (Housind Development and Infrastructure Limited)
  3. L&T (Larsen and Turbo)
  4. JP Associates (Jaiprakash Associates)
  5. HDFC (housing development finance corporation) - Already a bad Q3 result by HDFC, net profit down by 16%.
  6. Unitech
  7. Ansal Infra
  8. Ansal Buildwell
These are just a few, and virtually all others having their core business anything to do with real estate and construction. Note that when I say 'stocks to avoid for 2009', I only intend to avoid the buy-and-keep approach with a long term viewpoint. Short term buying for trading maybe an option depending on circumstances as long as a pre-decided stop loss is respected.

Jan 21, 2009

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