Markets In FY24: Realty index surges 133% marking its best fiscal since inception

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Nifty Realty index emerged as the top performing index among all market indices in financial year 2024 with gains of 133%. This was the best financial year for the index since its inception in financial year 2010, during which it had gained 114%.

Besides the index for real estate stocks, the CPSE and Infrastructure indices also delivered returns of 100% or more during financial year 2024.

All 10 constituents of the Realty index ended the year with gains. Six of them gained over 100%.

Bengaluru-based developers were the top performers on the Realty index during the financial year. While Sobha’s shares more than tripled in value, those of Prestige Estates nearly tripled.

Mumbai-based Sunteck Realty was the worst performer on the index, gaining 37% during the financial year.

Real Estate stocks outperformed during the year as demand for housing continued to remain high. Housing sales hit a fresh peak in 2023 with the top seven cities witnessing a 31% growth year-on-year, according to a report from ANAROCK. The Mumbai Metropolitan Region saw the highest sales of over 1.5 lakh units in 2023, which also forms the first nine months of fiscal year 2024.

The trend as continued in the last three months of financial year 2024 as well. The top seven cities reported a 14% year-on-year growth during the March quarter, according to the ANAROCK report.

Gautam Duggad of Motilal Oswal Financial Services, in an interaction with CNBC-TV18 on March 20 said that the real estate space has remained stagnant for more than a decade, but this time, the upcycle in real estate and hotels is going to be much longer. Duggad is bullish on real estate stocks in his model portfolio.

Knight Frank, another real estate consultant, believes the price rise in Mumbai’s luxury real estate will continue for the next three to four years.

“The long term prospects of the real estate definitely looks absolutely strong. Next 50 years, Mumbai is going to be under reconstruction. I think we are going to see the real estate companies continuously doing well, going forward as well. In the near term, I would like to believe that some of the companies, particularly those catering to the Metro markets like Mumbai, have clearly scaled up on valuation. And that’s where I would remain a little bit more watchful. One would like to buy the stock when the market gives you corrected price,” Deven Choksey of DRChoksey Finserv told CNBC-TV18.

However, Madangopal Ramu of Sundaram Alternate Assets has a cautious view on the sector. He also said that the sector is getting very difficult to judge from a short-term perspective.

“The demand that has come back in 2023, we are not very sure like whether it will continue in 2024. We are seeing already job cuts in IT sector. So we need to be a little more cautious on how the real estate sector demand will continue to do so, at present we don’t own much of real estate stocks in our portfolios,” he said.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow