PremiumMUMBAI: Shares of realty companies surged on Monday, with the S&P BSE Realty index hitting a 10-year high, as construction activities seem likely to pick pace with states easing lockdown curbs amid a steady fall in covid cases.
The realty index hit an intra-day high of 3040.82 points, its highest since February 2010.
Over the last two months, the index has risen 27% compared to an 8% gain in the benchmark Sensex. Among stocks, DLF, Godrej Properties, Oberoi Realty, Phoenix Mills, Prestige Estate, Indiabulls Real Estate, Sobha, Sunteck Realty have advanced 10-47% during the period.
"We have seen a good turnaround from real estate sectors after the hit from the covid-19 pandemic in 2020. Some like Oberoi Realty, Brigade, Godrej Property have reported better-than-expected pre-sales numbers in 2nd half of 2021 on the back of pent-up demand in the sector. We expect that Q1FY22 will not be as good as the last quarter due to the state-wise lockdown, but the long-term story of the real-estate market has been maintained," said Yash Gupta, equity research associate, Angel Broking.
After the lockdown, analysts say, property registrations saw a sharp recovery in June. Record low interest rates, good schemes, discounts, are among the key drivers boosting outlook for the sector even as stamp duty cuts have been rolled back.
Real estate has seen a down cycle of more than five years following the implementation of RERA, demonetisation, credit issues, and then pandemic. As a result, small players took a hit, losing market share. Along with this, customer preference for ready-to-move in properties and brand loyalty favour listed real-estate players, analysts said.
"We expect the real estate sector to outperform, and this may be a start of a new upcycle in the real-estate sector after consolidation in the last 10 years," said Gupta.
According to a CLSA report, top developers aim to double their sales over the next three to four years, benefiting from strong demand, affordability and industry consolidation. Most of them have been targeting strong cash flow generation and looking to reduce debt. They also aim to ramp up new project acquisitions. Rising vacancies mar the near-term outlook in the office segment but it remains positive for the long term.
According to a Knight Frank report, June saw a 327% year-on-year surge in registrations. With this, the sector hopes to end the year on a good number while attaining stability. Also, the increase in women home buyers to 4.7% in June from 1.8% in May showcases the success of stamp duty reduction for women. Additionally, June also witnessed 42% new registrations.
"Going forward, the sector expects significant traction from young home buyers and change in buying patterns, keeping in mind market dynamics", said Rohit Poddar, managing director, Poddar Housing and Development.
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