"Real estate stocks surged, fuelling the Nifty Realty index to a 15-year high with a 6.76% jump. The BSE Realty index also rose 5.63%, outperforming broader market indices. Leading the charge, Sobha developers recorded a 15.82% increase. Other firms, including Macrotech Developers, Godrej Properties, DLF, Oberoi Realty, Kolte Patil, Prestige Estates, and Brigade Enterprises, also saw significant gains. Analysts project sustained growth, highlighting Sobha's potential, given its focus on unlocking land reserves. Despite RBI rate hikes and rising residential prices, India's real estate demand reached a decade-high, with 2023 sales at 329,097 units, setting an optimistic tone for the sector in 2024. "
Real estate stocks are on fire with the realty index jumping more than 6.76% in a single-day, boosting the Nifty Realty index to a 15-year high. The BSE Realty index is up 5.63%. The remarkable increase demonstrated the bullish trend in the sector and outperformed more general market indices such as the Nifty.
This surge wasn't limited to a few players; it resonated across various companies. Bengaluru's Sobha led the pack with a staggering 15.82% jump, setting a new all-time high, thanks to a bullish endorsement by Motilal Oswal Financial. Macrotech Developers (Lodha), Godrej Properties, DLF, Oberoi Realty, Kolte Patil, Prestige Estates, and Brigade Enterprises also witnessed significant gains or hit record highs.
Motilal Oswal Financial Services said in a report after underperforming its listed peers on pre-sales growth over FY21-23, "we believe Sobha is set to outperform in terms of growth given its focus on unlocking its vast land reserve and exploring external growth opportunities through its healthy balance sheet".
According to market experts, this increase isn't merely a one-time occurrence. It is an indication of how resilient the real estate market is. Aamar Deo Singh, Head of advice at brokerage Angel One, emphasized the steady sales performance of the industry, driven by a national rebound in housing demand, particularly in premium and luxury segments.
Knight Frank India in a report said that despite the Reserve Bank of India (RBI) implementing a cumulative increase of 250 basis points in policy rates between May 2022 and February 2023 along with a steady rise in residential prices across major markets, the demand for residential properties in the country continued to grow and reached a ten-year high in terms of annual sales in the year 2023.
Annual sales saw a rise of 5% YoY with sales of 329,097 units recorded in 2023. Mumbai registered the highest sales of 86,871 units demonstrating a 2% YoY growth in 2023. Kolkata witnessed the highest home sales growth (in terms of percentage) at 16% YoY followed by Ahmedabad at 15%, while Pune grew at 13% YoY.
The renewed demand has led to an accelerated pace in residential development, with both half-yearly and annual volume of units launched reaching their highest levels in a decade. Notably, the launch volumes in 2022 and 2023 have surpassed the sales figures for the corresponding periods. It's worth highlighting that this has occurred only thrice in the past 10 years.
The industry's record-breaking sales numbers provide a solid foundation for confidence. Developers anticipate another 10-15% gain in sales in 2024 after Anarock Property Consultants reported a noteworthy 31% increase in residential property sales in 2023.
Predicting the rise in sales, analysts advise investors to look for good equities to purchase during market downturns. Dharmesh Shah, Head of Technical Research at ICICI Direct, emphasized the positive outlook, specifically pointing out potential interests in Oberoi Realty, DLF, Godrej Realty, and Kolte Patil.
This promising start hints at a potentially prosperous year for the real estate sector, backed by strong market fundamentals and a persistent rising trend in residential property sales.
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