Realty Stocks Log Biggest Weekly Drop in 11 Months

The Nifty Realty Index fell 9.2% this past week, making it the biggest single-week loss for real estate stocks in the last 11 months. The overall downtrend in real estate stocks came as a result of weak housing pre-sales and a slowdown in sales bookings of new homes. Key real estate companies, such as Anant Raj and DLF, led the way for heavy selling of real estate stocks this past week. 

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

For the most part, the Nifty Realty Index has decreased for 12 of 13 trading sessions. The index increased only 0.3% on January 16. On Friday, nine of the 10 components of the Nifty Realty Index traded lower, with only Sobha gaining.

Housing sales by value in the month of December decreased 6% year-over-year.

Pre-Sales Weakness Sparks Selloff

The weakness in pre-sales growth is one of the main reasons why real estate is experiencing this type of broad-based selling trend, as per a Moneycontrol report. According to that, until real estate developers move their focus from luxury segments to mid- and premium-income areas, housing volumes will remain relatively muted compared to the 2021 housing boom.

The stock price for Anant Raj fell as much as 6% on Friday. The stocks for Lodha Developers and Godrej Properties fell by a weekly average of 13.5% and 15.3%, respectively.

Shares of Brigade Enterprises lost 9.3%, Oberoi Realty lost 11.3%, and Sobha lost 12.3% over the course of the week.

DLF Sales Bookings Tumble

DLF’s nine-month sale booking totalled ₹16,176 Cr., a 16% decline, attributed to lower new supply coming to the market. Bookings during the December quarter dropped to ₹419 Cr., down from the previous high of ₹12,039 Cr.

Sector Shifts and Outlook

Although the decline has occurred, the brokerage continues to view the housing sector as neutral. Companies with annuity and similar portfolios will likely provide the best relative returns, with Prestige Estates being the broker's preferred company.

Many developers are seeking government incentives for mid-market housing, stable and predictable tax frameworks, and additional governmental support for sustainable building practices, as per news reports. The increasing emphasis on luxury is resulting in longer cash flow cycles and project timelines.