Nifty Realty may retest 2008 highs despite 20% drop: Analyst
The Indian real estate sector has been on a rollercoaster ride in the past year, with Nifty Realty falling by 20-25% from its post-COVID rally highs. However, analyst Sumesh Guleria believes that despite this drop, there is still scope for Nifty Realty to revisit its highs from 2008, ranging between 1,800-1,900.
Guleria, a Sebi-registered analyst, sees the current cycle of the real estate sector entering a mature phase, rather than ending. He attributes this to the steady demand reported by premium developers, strong project launches, and healthy sales. According to Guleria, earnings will be a key trigger to watch in the near term, and a strong quarterly performance could propel Nifty Realty to retest its 2008 highs.
The real estate sector has been a bright spot in the Indian economy, with the post-COVID rally driven by low interest rates, government support, and a shift in consumer behavior towards residential properties. However, the sector has been facing challenges in recent months, including rising construction costs, supply chain disruptions, and a slowdown in demand.
Despite these challenges, premium developers have reported steady demand and healthy sales. For instance, leading developers such as Godrej Properties, Oberoi Realty, and Prestige Estates Projects have reported strong sales in their recent quarterly results. Godrej Properties reported a 25% increase in sales bookings in the September quarter, while Oberoi Realty saw a 20% increase in sales. Prestige Estates Projects reported a 15% increase in sales in the same period.
Guleria attributes the steady demand to the changing consumer preferences, with more people opting for residential properties over commercial spaces. He also points to the government’s efforts to boost the real estate sector, including the recently announced reforms aimed at increasing transparency and reducing regulatory hurdles.
The analyst believes that the sector is entering a mature phase, characterized by steady growth rather than rapid expansion. He expects earnings to be a key driver of the sector’s performance in the near term, and a strong quarterly performance could propel Nifty Realty to retest its 2008 highs.
Guleria’s view is in line with the recent performance of Nifty Realty, which has rallied by 10% in the past month, driven by strong earnings reports from premium developers. The index is still down 20-25% from its post-COVID rally highs, but Guleria believes that it has the scope to revisit those levels in the near future.
In conclusion, despite the 20% drop in Nifty Realty from its post-COVID rally highs, analyst Sumesh Guleria believes that there is still scope for the index to revisit its 2008 highs. He attributes this to the steady demand reported by premium developers, strong project launches, and healthy sales. Guleria sees the sector entering a mature phase, rather than ending, and believes that earnings will be a key trigger to watch in the near term.
For investors looking to gain exposure to the Indian real estate sector, Guleria’s view suggests that it may be a good time to accumulate quality developers that have a strong track record of delivering consistent earnings. However, it is essential to do thorough research and due diligence before investing in any stock, and to consult with a financial advisor if necessary.
