Nifty Realty index jumps 40% in six months; Sunteck Realty, Sobha, Mahindra Lifespaces among real estate stocks to buy

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Macrotech Developers shares have rallied nearly 60%, Prestige Estates Projects jumped over 58%, DLF shares surged 48%, Godrej Properties up over 41% and The Phoenix Mills soared 36%. Among other Nifty Realty constituents, Brigade Enterprises, Indiabulls Real Estate, Oberoi Realty and Sunteck Realty are up in the range of 25%-35% in the last six months.

The overall Indian residential market size across India’s top 8 cities in FY22 crossed FY20 levels (pre-Covid), while FY23 industry sales booking value grew 36% YoY to ₹29,000 crore. While H1FY24 is expected to be muted in terms of launches, most real estate companies have a large launch pipeline for the festive season and H2FY24.

Also Read: Bajaj Finance share price up 12% this year so far; should you buy or avoid this stock? Here's what experts say ICICI Securities estimates the pan-Indian residential market share for its coverage universe to grow from 24% in FY23 to 27% in FY25E driven by a sales booking CAGR of 11.5% over FY23-25E. “While the pace of market share gains is expected to be slower given the strong market share gains already achieved over FY20-FY23, we estimate the pan-Indian residential market share for our coverage universe to grow from 24% in FY23 to 27% in FY25E.," the brokerage firm said in a report.

Moreover, interest rates or mortgage rates, which were in March 2022 at their lowest since 2005, started to rise amid monetary policy tightening by the central bank. Interest rate hikes in FY23 globally and in India have led to large lenders increasing home loan mortgage rates by 240-250 bps from 6.7% to around 9.2-9.3%.

This translates to an 18-22% higher monthly EMI outgo for new home buyers over a 20-year loan tenure. At the same time, residential