Nifty Realty index hits 20-mth high; Prestige Estates, Oberoi Realty up 6%

Sentiment was buoyed after the 23rd Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index Q42019 survey showed that the sentiment of the stakeholders in India have revived to the optimistic zone

Buyers flocked counters of real estate companies on Wednesday, with Nifty Realty index hitting a 20-month high, on expectations of strong earnings in the second half of the financial year 2019-20.

Among key gainers, Prestige Estates Projects and Oberoi Realty zoomed 6 per cent each on the National Stock Exchange (NSE). Besides, Indiabulls Real Estate, Brigade Enterprises, Sobha, Kolte-Patil Developers, Godrej Properties and DLF were up in the range of 1 to 5 per cent.

At 10:13 am, Nifty Realty index was trading as the sole gainer among sectoral indices, and was up 1.6 per cent at 322 points. In comparison, the benchmark Nifty50 declined 0.56 per cent. The index was trading at its highest level since May 2018. 

During the first 11 trading days of the current calendar year 2020, the real estate index rallied 8 per cent, as against a per cent rise in the Nifty 50 index.

Sentiment was buoyed after the 23rd Knight Frank–FICCI–NAREDCO Real Estate Sentiment Index Q42019 survey showed that the current sentiments of the real estate stakeholders in India have revived to the optimistic zone of 53 in the October-December quarter of 2019 (Q4 2019). It was in the pessimistic zone (below 50 mark) for two consecutive quarters. 

The Real Estate Sentiment Index is based on a quarterly survey of key supply-side stakeholders which include developers, private equity funds, banks and Non-Banking Financial Companies (NBFCs).

“The sector’s optimism is far pronounced for the office sector, which has been growing strength to strength in the past few years, reaching historic highs in 2019. In the next 8 – 10 quarters, if the office, other commercial including retail, warehouse and logistics and the residential sector continue to show positive growth, despite the pace of growth of Indian economy, we can expect the real estate sector to show upward curve of revival,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India.

Analysts at JP Morgan believe the residential down cycle -- that started in 2011 ended in 2017 -- is now in the early stages of a new upcycle. This cycle is backed by multi-year high affordability across major cities and mortgage rates that are now nearing a ‘psychological’ low 7 per cent handle. This is also borne out in positive news flow by various developers that have announced sell-out responses to projects over the last three months.