Realty index surges 108% from March low; DLF, Godrej Properties soar 100%

Shares of real estate companies were on a roll with the market price of nine firms more-than-doubling from their March lows as the sector has been recording healthy performance, and continues to hold a strong business outlook.

The Nifty Realty index, too, has more-than-doubled, zooming 108 per cent, from its March 28, 2023 level of 372 on the National Stock Exchange (NSE). The realty index hit a multi-year high of 772.35 in the intraday trade on Thursday.

At 02:19 PM, the Nifty Realty index, the top gainer among sectoral indices, was up 3.5 per cent after the US Federal Reserve signaled it would cut rates several times next year. In comparison, the Nifty 50 index was up 1.3 per cent at 21,195. Godrej Properties, Brigade Enterprises, DLF, and Oberoi Realty were up in the range of 4 per cent to 5 per cent.

Since March 28, the market prices of DB Realty, Puravankara, and Prestige Estates Projects have zoomed over 200 per cent, while those of DLF, Godrej Properties, NBCC, Anant Raj Industries, Sobha, and Kolte Patil Developers have appreciated in the range of 100 per cent to 166 per cent.

Realty companies remain optimistic on the demand front for FY2024 led by strong launch pipeline and sustenance sales.

According to a report, homes worth Rs 4.5 trillion would have been sold in India when the year ends in December, up 38 per cent from 2022 when the number was Rs 3.27 trillion. CLICK HERE FOR FULL REPORT

Analysts at Nuvama Institutional Equities believe the buoyancy in sales would sustain going ahead, driven by robust business development targets, pickup in launches, aided by cash flow improvement, interest rate stabilisation, diversification, and market share gains.

"The Mumbai market has been stable despite interest rate hikes and the levy of metro cess. Increase in wages, employment opportunities, and return-to-office are expected to keep home-buying activity healthy," the brokerage firm said in a sector report.

Meanwhile, as per report, a proposal to include stamp duty and registration charges in the project cost can aid the buoyant residential demand. Additionally, recent curbs by the Reserve Bank of India (RBI) on unsecured lending can drive higher growth rates in secured lending (housing) as lenders look to plug the growth gap in a relatively low risk fashion, said analysts at Dolat Capital in a sector update report.