Real Estate Stocks Bounce Back: Oberoi Realty and Others Surge Up to 16% in Just Six Sessions

Real estate stocks are making a strong comeback after a sell-off in early October. This positive trend began when the Reserve Bank of India (RBI) changed its approach from a strict monetary policy to a more neutral one, raising hopes for future interest rate cuts.

Lower interest rates typically benefit the real estate sector, leading to improved investor confidence. This boost was also supported by solid quarterly results from real estate companies, which reported increased sales bookings for the September quarter, driven by strong demand for residential properties, especially in the luxury market.

In the last six trading sessions, the Nifty Realty index climbed from 1,020 to 1,080, a 6% increase. During this time, Oberoi Realty shares soared by 16%. Other companies like Godrej Properties, Prestige Estates Projects, and Raymond saw gains of 10%, while DLF, Sobha, and Mahindra Lifespace Developers rose by 6%.

Despite the traditionally unlucky ‘Shradhh’ period falling in September this year, real estate companies reported impressive booking values. Macrotech Developers, known for its ‘Lodha’ brand, recorded its highest quarterly pre-sales at ₹4,200 crore, representing a 21% year-over-year growth. The company reached around ₹8,300 crore in pre-sales for the first half of FY25 and aims for a 20% growth in pre-sales for the full year.

Godrej Properties also achieved record performances in Q2 and H1, reporting a booking value of nearly ₹5,200 crore, up 3% YoY. For the first half of FY25, their booking value surged over 89% to more than ₹13,800 crore, marking their best H1 performance ever.

Puravankara also saw a boost, with sales of ₹1,331 crore in Q2 FY25, up from ₹1,128 crore in Q1 FY25. Their total sales for H1 FY25 reached ₹2,459 crore.

Rise in Premium Property Sales

Residential sales in India increased by 17% year-on-year during the first nine months of 2024, according to JLL, a real estate company. Notably, 85% of the projected total residential sales for 2023 were achieved in this period, with 229,908 units sold.

JLL data showed the premium and luxury segments experienced the most growth. Sales of premium properties (priced ₹3-5 crore) rose by 107%, while luxury properties (priced ₹5 crore and above) saw a 96% increase.

Around 39% of residential sales during this time were in the mid-segment (priced ₹50 lakh to ₹1 crore), followed closely by the upper-mid segment (priced ₹1-3 crore) at 35%.

As disposable incomes rise, more people are investing in real estate, which remains a preferred asset for Indian households. This shift towards luxury living has driven demand for high-end homes that offer superior amenities.

High-net-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNIs) have significantly influenced the demand for luxury properties, particularly in Tier-I cities. Since FY22, there’s been a growing preference for spacious, well-equipped residences that accommodate remote work and provide better security.

This increased demand for luxury homes has led to rapid sales of premium projects, resulting in limited inventory and rising prices. To meet this demand, developers are launching new phases of existing projects at higher prices, reflecting the ongoing premium on luxury real estate.