CLSA sees June rate cut boosting realty; Sobha, Prestige, Sunteck Realty as top picks

CLSA expects the RBI to deliver its third rate cut in June

Global brokerage firm CLSA expects the Reserve Bank of India (RBI) to reduce interest rates by 25 basis points in the June policy meeting. This would bring the total rate cuts for the year so far to 75 basis points. With this move, the real estate sector is expected to benefit. CLSA reiterated Sobha, Prestige Estates, and Sunteck Realty as its top investment picks in the sector.

The brokerage also stated that it sees an additional 50 to 75 basis points of rate cuts for the rest of financial year 2026. Falling interest rates are likely to support demand in the affordable and mid-income housing segments. In addition to their top picks, CLSA said that DLF and Phoenix Mills are also expected to benefit from lower borrowing costs and potential asset revaluation.

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There are rising expectations for a third consecutive rate cut. The Monetary Policy Committee (MPC) may cut the repo rate by 25 basis points. Some experts believe the RBI could opt for an even deeper rate cut to improve liquidity and support economic growth, especially amid ongoing trade tensions.

Earlier this year, the RBI's MPC cut the key benchmark lending rate (repo rate) by 25 basis points each in its February and April meetings.

The residential real estate sector ended FY25 with sales of 1 billion square feet, which marks a 3 percent year-on-year decline. This drop was largely due to a sharp 33 percent fall in sales in Hyderabad. Mumbai Metropolitan Region (MMR) and Bengaluru also witnessed soft sales volumes, mainly because of slower project launches. However, the National Capital Region (NCR) continued to perform strongly, with a 47 percent increase in volume sales, according to analysts at Kotak.

Looking ahead, Kotak analysts expect growth to remain strong in FY26, projecting around 20 percent year-on-year growth. This is expected to be supported by 140 million square feet of planned launches, with a gross development value (GDV) of approximately Rs 1.7 lakh crore. The first quarter of FY26 has already seen a strong response to Prestige’s first project in Ghaziabad (Rs 6,500 crore), a new tower launch in Goregaon by Oberoi (Rs 970 crore), and the upcoming launch of DLF’s Privana project (Rs 10,000 crore).