Nifty Realty index soars 77% in 2023 so far amid residential sales boom; Prestige Estates, Brigade, DLF top gainers

Nifty Realty index soars 77% in 2023 so far amid residential sales boom; Prestige Estates, Brigade, DLF top gainers


The real estate stocks have seen a stellar performance in 2023 with the Nifty Realty index surging around 77% so far this year amid strong sectoral tailwinds such as strong demand and rise in property prices.

Among the 10 real estate stocks in the Nifty Realty index, Prestige Estate Projects shares have jumped 146% year-to-date (YTD), while Brigade Enterprises and DLF shares have risen over 86% each.

Sobha, Macrotech Developers, Oberoi Realty, Godrej Properties and The Phoenix Mills share prices have gained anywhere between 50% to 80% YTD.

Analysts believe a recovery in property prices and rise in yields has made investment in residential properties attractive which has been responsible for continued demand in the sector. Strong macroeconomic conditions and positive industry structure could provide a multi-year upcycle for the sector.

Also Read: Real estate trends: Will the sector witness a rise in women homebuyers in 2024? Experts decode

In just the first nine months of 2023, the total residential property sales value is already 7% higher than the whole of last year, with the top 7 cities seeing inventory worth approx. 3,48,776 crore sold in this nine months period, as per data by ANAROCK Property Consultants.

Between January and September 2023, approx. 3.49 lakh units were sold in the top 7 cities, against approx. 3.65 lakh units in entire 2022.

“The fact that the housing sales value in 9M 2023 exceeded that of the whole of 2022 reflects the increased demand for premium luxury homes this year. This, along with the fact that average prices in the top cities rose by anywhere between 8-18% this year, makes an apple-to-apple comparison of annual sales values challenging,” said Anuj Puri, Chairman – ANAROCK Group.

The strong sales momentum indicates that the total value of homes sold in 2023 will cross the 4.5 lakh crore mark, which is 38% higher than the total sales value of entire 2022 of 3.27 lakh crore.

Also Read: NRI contributions to Indian real estate surge over five years, to reach 20% by 2025

“As the final curtain descends in 2023, the real estate industry witnesses an impressive surge, with Gurugram’s mid-housing sector taking center stage. The year-end reflection unveils a YoY upswing, showcasing a strategic prowess in meeting the escalating demand for affordable yet quality residences,” said Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd.

Looking ahead to 2024, Aggarwal believes the positive trends set in motion in 2023 reverberate as a promising melody for the entire real estate industry.

Shares of Delhi-NCR based Signature Global made a decent stock market debut in September this year. Signature Global shares were listed at 445 apiece on the BSE, a 15.58% premium over its issue price.

The stock has seen a massive upmove after listing and now trades more than 82% higher than the listing price at around 812 apiece.

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Real estate developers and consultants expect the strong demand momentum in the sector to continue going ahead in 2024. The outlook for the residential real estate market as well as the commercial real estate segment remains robust.

Ramani Sastri, Chairman and MD, Sterling Developers expects to continue seeing a multi-fold growth in real estate investments since the real estate market is less volatile than other investment markets and delivers higher returns.

“Overall, consumers are keen to buy homes as stability and security is on top of their mind now and the recent past has been testament to the fact that home buyer confidence is at an all-time high,” he said.

By 2030, India’s urban population is expected to hit 600 million people and hence substantial housing demand is on the horizon.

“The unwavering focus on infrastructure will continue to drive real estate growth over the next few years. As long as the macro fundamentals are stable, demand for real estate will continue to grow. The Indian real estate market is booming and being a part of its growth can extend favourable returns in the future,” said Sastri.

Also Read: Bengaluru house rentals rose about 30% in 2023, highest among all metros: Reports

The year 2023 is on course to become one of the best-performing years in the real estate sector across asset classes. Meanwhile, leasing activity in the office market is inching towards 50 million sq.ft. comfortably.

“After two consecutive years of significant recovery and sturdy growth, 2024 is likely to be a year of redemption where real estate will reshape, restructure and realign on a stronger domestic footing. In addition to heightened focus on sustainability, a mix of core plus flex strategy will characterise the commercial real estate market of India, even in the smaller Tier II cities,” said Badal Yagnik, CEO, Colliers India.

Active institutional investor pursuit for prime ventures in office, residential, data centre, logistics and shared space markets will extend India’s decisive positioning in real estate-specific investments within the APAC region, he added.

For the co-working spaces, the year 2023 has proven to be highly successful, as the segment witnessed a significant resurgence in demand following the setbacks experienced during the COVID-19 pandemic. This revival has outpaced the available supply, marking a recovery in the flexi space market.

Also Read: Office space leasing revival is subject to conditions

“The growth of flexible workspaces is back on a positive trajectory, and 2024 is poised to be a transformative year for the flex office segment. Key trends expected to drive growth in the sector include the evolution of business models, heightened investor activity, and demand from domestic as well as international companies,” said Amal Mishra, Co-founder, UrbanVault, a Bengaluru-based managed co-working space provider.

Moreover, technology-enabled services, with a focus on AI, will take center stage in shaping the future of flexible spaces. Customized solutions will be integral to managed flexible spaces, with the expectation that the segment will maintain its upward trajectory in 2024 and beyond, Mishra said.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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