2 min read.Updated: 22 Sep 2021, 01:17 PM ISTLivemint
Indian real estate market didn't perform for the last five years but it is showing a strong recovery in 2021 where the sector is bottoming out in terms of both volumes and prices, say analysts
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Realty stocks continue the gaining momentum amid bullish outlook on India's real estate sector. The Nifty Realty index has gained more than 7% in the last three trading sessions. Sentiment for the sector has furthermore been improved on signs of demand revival in the residential and commercial properties space.
One such recent example is Godrej Properties that has sold residential properties worth ₹575 crore in a single day at its luxury project in Noida. The Mumbai-based realty firm's total sales bookings in this project in the past six months have touched about ₹1,140 crore.
“We have a very bullish view on the Indian real estate sector for the next 3-4 years and the market is also taking cognizance of the turnaround in the Indian realty sector where the Nifty realty index has been surging despite negative news are coming from Chinese real estate market," said Santosh Meena, Head of Research, Swastika Investmart Ltd.
Indian real estate market didn't perform for the last five years but it is showing a strong recovery in 2021 where the sector is bottoming out in terms of both volumes and prices. Low interest rates, government support, and consolidation in the industry after RERA are acting as key catalysts for a turnaround in this sector. Further, market observers also see unlocking theme acting as key triggers for the residential space.
Meena added that technically, the Nifty Realty index is coming out of 10 years of consolidation that may lead to a big bull run in the next 2-3 years. Sobha is their top pick in the realty space due to its diversified portfolio, strong growth, and healthy balance sheet however Oberoi realty, Kolte Patil, Brigade enterprises, Prestige, and Suntek realty are other preferred picks.
Meena has also advised investors to focus on indirect beneficiaries of the boom in real estate sectors like Asian Paints, Pidilite, Polycab, Kajaria Ceramics, Cera Sanitary, HSIL, HIL, Ultratech Cement, Canfin homes, etc. “If we see any correction in the overall market due to any global trigger then that will be a great buying opportunity to ride a bull run in the real estate sector."
The bullish momentum in the real estate space is seen as just a start of a fresh bull run after a decade of underperformance. India’s property market is rebounding after being in a down cycle for the last six years as a series of headwinds ranging from the pandemic, a bad-loan crisis and a surprise 2016 cash ban hurt demand for new houses and apartments.
“Customers are now having preference towards the branded players like Sobha Developers. Company expected to launch 17 new projects/phases spread over 12.56mn sqft across various geographies. Majority of launches will be coming from existing land banks. Company having land bank of approx. 200mn Sqft of salable area. We continue with our buy rating on Sobha Limited and Neutral outlook on Godrej Properties," said Yash Gupta, Equity Research Analyst, Angel Broking.