scorecardresearchHousing sales at 4-year high in March 2022 quarter; Nifty Realty also up over 60%

Housing sales at 4-year high in March 2022 quarter; Nifty Realty also up over 60%

Updated: 05 Apr 2022, 02:10 PM IST
TL;DR.

The Nifty Realty index surged 62 percent in the last 4 years, however, it underperformed the benchmark Nifty during this time.

The Nifty Realty index surged 62 percent in the last 4 years, however, ut underperformed the benchmark Nifty during this time.

The Nifty Realty index surged 62 percent in the last 4 years, however, ut underperformed the benchmark Nifty during this time.

Housing sales rose 9 percent to 78,627 units during the January-March period, the highest quarterly sales in the last four years, across eight major cities, according to property consultant Knight Frank India

This far exceeded the pre-pandemic average quarterly sales for the third quarter signifying a sustained recovery across the country.

The Nifty Realty index surged 62 percent in the last 4 years, however, it underperformed the benchmark Nifty during this time. The benchmark Nifty rose 78 percent in the last 4 years.

Among constituents, all except, Indiabulls Real Estate gave positive returns in this period. Brigade Enterprises rose the most, up over 200 percent in the last 4 years followed by Godrej Properties, which rallied 135 percent. Meanwhile, Oberoi Realty, DLF, and Phoenix Mills rose between 85 percent to 100 percent while Prestige Estates advanced 72 percent, and Sobha added 46 percent. However, Indiabulls Real Estate lost 35 percent in this time.

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Source: Knight Frank Research

Mumbai, which remained the largest market by volume, saw sales of 21,548, registering a 9 percent decline YoY. Meanwhile, Delhi – NCR grew the most at 123 percent YoY to 15,019 new homes, making it the second-largest market by volume.

Bengaluru, which was the third-largest residential market by volume, registered a YoY growth of 34 percent at 13,663 new units. Ahmedabad, although on a lower base, grew an impressive 34% YoY to 4,105 units.

“The growth in the residential market has been impressive for the key markets of India over the last few quarters, as a result of a strengthening economy as well as individual financial confidence. Low-interest rates, best affordability levels, healthy wage growth and the waning pandemic with lower risk of further disruptions have created a favorable environment for homebuyers who have rediscovered the need for new and better housing,” said Shishir Baijal, chairman and managing director, Knight Frank India.

“While financial stress remains a significant factor for developers across markets, healthy and sustained homebuyer activity should pave the way for gradual price increases and enable them to tide over the rise in costs of critical inputs like cement and steel,” he added.

Realty stocks were among the worst hit in the recent sell of, however, the recent reports show signs of recovery.

In a recent report, brokerage house Nirmal Bang said, "there is the beginning of the new upcycle in residential demand. The increase in demand is supported by lower interest rates, low prices, quality infrastructure and high household disposable incomes. The scale is building up in the residential segment, driven by gain in confidence among the home buyers amid the consolidation of the market."

Nirmal Bang has buy calls on several real estate companies, including Sobha (target price: 1,227), Prestige (target price: 617), Mindspace (target price: 445), Embassy (target price: 463) Nesco (target price: 873), Phoenix Mills ( 1,279) and Brigade (target price: 619).

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.

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First Published: 05 Apr 2022, 02:10 PM IST