Nifty Realty index rallies 4%; Godrej, DLF, Oberoi Realty gain up to 9%

In the past month, the realty index has rallied 21 per cent against 6 per cent gain in the Nifty50 index

Shares of real estate companies continued their northward movement, with the Nifty Realty index surging 4 per cent on the National Stock Exchange (NSE) on Wednesday on hopes of revival in demand.

Indiabulls Real Estate advanced 17 per cent to Rs 80 on the NSE on the back of heavy volumes. A combined 17.5 million equity shares had changed hands on the counter on the NSE and BSE.

Godrej Properties, DLF and Oberoi Realty were up in the range of 4 per cent to 5 per cent, while, Sobha, Sunteck Realty and Omaxe from the index were up between 1 per cent and 3 per cent on the NSE.

At 11:54 am, Nifty Realty index, the top gainer among sectoral indices, was up 4 per cent, as compared to 0.56 per cent rise in the Nifty50 index. In the past month, the realty index rallied 21 per cent, against 6 per cent gain in the benchmark index.

Godrej Properties hit a fresh record high of Rs 1,405, up 9 per cent in intra-day trade today. The Mumbai-based real estate developer announced, on Monday, that Global Real Estate Sustainability Benchmark (GRESB), an organization that provides Environmental, Social and Governance (ESG) benchmarks for real estate organizations across the world has recognized Godrej Properties as a Real Estate Development Sector Leader both globally and in Asia for listed residential real estate.

Over the last few years, the real estate sector has undergone several challenges due to a string of regulatory reforms and government policies which organized the sector, albeit with pain and disruption. Demonetization and RERA (Real Estate Regulatory Authority) put a block on the informal lines of private capital that fueled the speculative growth in the sector till 2015/16. GST (Goods and Services Tax) and RERA added transparency and accountability in the sector.

According to Sharad Mittal, CEO & Head, Motilal Oswal Real Estate, Covid-19 has led to a clear preference of staying in an owned home. The brokerage firm believes that this will spur home demand over a period of time and give rise to a new phase of growth in residential real estate, one that will be led more by volume and less by price.

“In 2021, we believe that most of these office assets will continue to remain stable. However, as companies explore the work from home (WFH) strategy, developers may review launch of new supply, especially where it is speculative and not build-to-suit. Most companies will review new space requirements to align it with their WFH strategy. Developers will build new supply but will albeit with a cautious approach,” the brokerage firm said on ‘Outlook of 2021 for the Real Estate Sector’.

During this year, we have witnessed some of India’s largest office developers monetizing office assets to reduce debt and/or generate liquidity. In the coming year, we may witness several other developers follow this trend as developers prioritize cashflows and investors look to double down on their yield portfolios, it said.