Real estate stocks see biggest weekly drop in 11 months, led by DLF, Anant Raj; Nuvama flags weak pre-sales as concern

Realty shares rise in trade.

• Nifty Realty index fell 9.2 percent this week, its steepest drop in 11 months.
• Housing sales value declined 6 percent year-on-year in the December quarter.
• DLF sales bookings fell 16% in nine months due to reduced new home supply.

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Shares of real estate firms recorded their steepest weekly fall in about 11 months, weighed down by concerns over housing sales, with stocks such as Anant Raj, DLF among others leading the decline.

The Nifty Realty index fell 9.2 percent this week, marking its biggest weekly drop in about 11 months. The index slipped up to 3 percent during intra-day trade on Friday and has declined in 12 of the last 13 sessions. It rose marginally by 0.3 percent in only one session during this period, on January 16.

In Friday’s session, nine of the 10 constituents of the index were trading in the red, with Sobha Ltd being the lone gainer.

Anant Raj shares fell as much as 6 percent, while Lodha Developers, Godrej Properties, DLF and Oberoi Realty declined up to 5 percent.

On a weekly basis, Godrej Properties and Lodha Developers dropped 15.3 percent and 13.5 percent, respectively. Brigade Enterprises fell 9.3 percent, Oberoi Realty declined 11.3 percent and Sobha Ltd lost 12.3 percent.

"Rationalisation of home loan interest benefits, continued focus on infrastructure spending, and incentives for affordable and mid-income housing will go a long way in boosting buyer confidence. A stable tax framework and support for sustainable construction will also help developers deliver quality projects while aligning with long-term urban growth goals," Umang Jindal, CEO, Homeland Group added.

Global brokerage Nuvama said housing sales value declined 6 percent year-on-year in the December quarter, the steepest fall since the upcycle began in 2021. While noting that the Indian real estate sector has seen strong growth since 2021 after years of stagnation, the brokerage maintained a ‘neutral’ stance on housing stocks despite the recent correction.

Nuvama said the correction could continue amid concerns over pre-sales growth. It added that housing volumes are likely to remain soft until developers reduce their focus on the luxury segment and shift towards mid-income and premium housing, while also working to improve affordability by keeping prices and ticket sizes in check.

The brokerage said companies with a sizeable annuity portfolio are likely to perform better on a relative basis, and named Prestige Estates Projects as its top pick.

Deepak Kapoor, Director, Gulshan Group, said "Housing developments that are quality-led and design-intensive operate on longer gestation cycles with higher capital commitment than mass housing. Granting real estate industry status will improve access to structured financing, enhance investor confidence, and enable the sector’s progression towards global standards and long-term value creation."

Meanwhile, realty major DLF Ltd reported a 16 percent decline in sales bookings to Rs 16,176 crore in the first nine months of the current fiscal due to lower new home supply. The company, however, said it remains confident of meeting its annual pre-sales target.

DLF, the country’s largest real estate company by market capitalisation, had recorded sales bookings of Rs 19,187 crore in the year-ago period.

According to an investor presentation, the company’s sales bookings fell sharply to Rs 419 crore in the December quarter from a record Rs 12,039 crore in the corresponding period of the previous year.

Explaining the sharp decline, DLF said new bookings for its ultra-luxury housing project ‘Dahlias’ were on hold during the December quarter due to a redesign aimed at enhancing customer experience.

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