India’s real estate stocks have slumped to a ten-month low, but the signs are that the sector’s just catching its breath before its next sprint.
Just step outside in Mumbai, where glittering skyscrapers are rising like weeds.
Real estate is the poster child of an economy growing faster than almost any other in the world, even as fears of a slowdown creep in.
Knight Frank, a consultant, projects the size of the market in India will touch $1 trillion in just five years, from around $500 billion now. A big chunk of the growth is coming from luxury housing.
Nothing says “India is booming” quite like the proliferation of “Trump towers” in the country. They’ve already popped up in Mumbai and Pune, with Kolkata and Delhi gearing up for their debut, while six more similar projects are waiting in the wings.
So why the pullback in real estate stocks? Blame it on elections last summer, which slowed approvals for new projects, creating supply bottlenecks just when developers were primed to cash in.
Anuj Puri, chairman of property consultancy Anarock Group, admits 2024 was “a mixed bag” as housing supply couldn’t keep up with demand, dragging down sales compared to the previous year.
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Luxury thrives
The appetite for premium living clearly hasn’t diminished. High economic growth continues to churn out the newly rich, and these buyers are hungry for luxury homes.
Nish Bhatt, CEO of real estate investment consultant Millwood Kane, sees this as the backbone of sustained demand. He says the queue for high-end living is very real, and it’s one reason investors shouldn’t write off the sector.
What’s more, India’s central bank is expected to deliver a rate cut soon, which could inject fresh energy into the property market, says Karan Shetty, co-founder at Claravest, a real estate investment platform.
And with the national budget around the corner, whispers of tax breaks for homebuyers are adding to the optimism.
Lower taxes, cheaper loans, and the aspirational lure of a luxury home? That’s a cocktail investors won’t want to miss.
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Stocks to watch
For stock pickers, the options are juicy.
Oberoi Realty looks like the standout. Sure, its recent earnings missed the mark, but analysts at Elara Capital and Axis Securities aren’t sweating it. They point to Oberoi’s solid pipeline of projects and aggressive entry into new markets as reasons the stock could be worth watching.
Axis sees an upside of 38% from current levels for the stock.
Compare that to rivals like DLF, which trades at an eye-watering 41 times earnings, or Macrotech Developers, whose family legal drama has weighed on a stock that’s already down over 20% this year.
Oberoi, trading at just 23 times earnings, looks like the value pick for anyone bullish on Indian real estate.
The stocks might be lagging now, but all it takes is a rate cut or a budget tweak to reignite the rally.
Edited by Thyagu Adinarayan and Tim Hume. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
