Real estate stocks regain momentum; Oberoi Realty and 6 others jump up to 16% in 6 sessions

Real estate stocks staged a strong comeback in recent sessions following a sharp sell-off in the first week of October. This impressive rebound began when the RBI shifted its policy stance from a hawkish 'withdrawal of accommodation' to a more neutral position, raising hopes for potential rate cuts.

As the real estate sector is a major beneficiary of lower interest rates, investor sentiment towards these stocks improved. The gains were further bolstered by healthy quarterly results from real estate companies, which reported annual growth in sale bookings for the September quarter, driven by robust consumer demand for residential properties, particularly in the luxury segment.

Over the past six trading sessions, the Nifty Realty index has increased from 1,020 to 1,080, representing a 6% rise. During this period, Oberoi Realty shares surged by 16%, while Godrej Properties, Prestige Estates Projects, and Raymond each saw gains of 10%.

Additionally, stocks such as DLF, Sobha, and Mahindra Lifespace Developers have rallied 6% during the six trading sessions.

Despite the inauspicious 'Shradhh' period falling in September this fiscal year (as opposed to October in FY24), real estate companies reported significant growth in booking values. Macrotech Developers, which sells its properties under the 'Lodha' brand achieved its highest-ever quarterly pre-sales at ₹4,200 crore, marking a 21% year-over-year (YoY) growth.

Consequently, the company reached approximately ₹8,300 crore in pre-sales for H1 FY25. With a 21% YoY growth in pre-sales during the first half and the festive season underway, Macrotech is on track to meet its full-year guidance of 20% pre-sales growth.

Godrej Properties also delivered record-breaking Q2 and H1 performances across key operational metrics, including bookings, collections, operating cash flow, and new business development.

In Q2, Godrej Properties reported a booking value of nearly ₹5,200 crore, up 3% YoY from the sale of over 5.1 million square feet. This represents the highest Q2 booking value in the company's history.

For H1 FY25, booking value surged over 89% YoY to more than ₹13,800 crore, driven by the sale of over 8,600 homes, totaling more than 14 million square feet. This is the highest H1 booking value achieved by Godrej Properties to date.

Puravankara recorded sales of ₹1,331 crore in Q2 FY25, up 18% from ₹1,128 crore in Q1 FY25. The company also achieved a total sale value of ₹2,459 crore for H1 FY25.

Premium properties on the rise

The sale of residential units in India surged by 17% year-on-year (YoY) during the first nine months of 2024 (January to September), according to JLL, a real estate company.

It also highlighted that 85% of the total residential sales projected for 2023 have already been achieved within the first nine months of this year, with a total of 229,908 units sold during this period.

As per the data by JLL, the premium and luxury segments saw the highest growth in sales. Premium projects ( ₹3-5 crore) witnessed a 107% Y-o-Y surge, while luxury projects ( ₹5 crore and above) experienced a 96% increase.

It also added that during the nine-month period of 2024, around 39% of the residential sales were in the mid-segment ( ₹50 lakh to 1 crore), closely followed by the upper-mid segment ( ₹1-3 crore), with a 35% share.

As disposable incomes rise across India, more individuals are choosing to invest in real estate, a consistently favoured asset for Indian households. This shift towards a more affluent lifestyle has fueled a growing desire for luxury homes that offer enhanced amenities and comforts beyond conventional housing.

High-net-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNIs) have also played a crucial role in driving demand for luxury properties. In Tier-I cities, the demand for these properties has surged since FY22, with post-Covid preference for spacious, well-equipped residences that accommodate remote work and provide enhanced security.

This increased appetite for luxury homes has led to rapid sales of premium launches, resulting in a shortage of such inventory and subsequent price increases. To meet this growing demand, developers are launching new phases of existing projects at higher price points, reflecting the continued premium on luxury real estate.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.