Luxury development boom stokes jump in Indian real estate shares
ADVERTISEMENT A gauge of local property shares have surged more than 25% from an April low, putting the sector on track to outperform the benchmark Nifty 50 Index for a fifth straight month in July. The rebound follows a sharp selloff earlier this year amid concerns about a slowing economy.
Investors are betting on a turnaround in India's property market with developers set to report a record 447 billion rupees ($5.2 billion) in pre-sales in the first quarter, according to a July 7 report from Kotak Institutional Equities. Upcoming new launches from DLF Ltd., Prestige Estates Projects Ltd. and Lodha Developers Ltd. are adding to stronger sentiment.
'We believe tier-1 developers with strong balance sheets and diversified portfolios should continue to benefit from the structural long cycle positive demand trends in India,' Harsh Wardhan Modi, an analyst at JPMorgan Chase & Co., wrote on Friday.DLF said it sold 110 billion rupees worth of luxury homes within a week of launch in June, while Prestige notched an all-time high sales bookings in the quarter. While shares of the two are down year to date, they're more than 35% higher since bottoming out in April.
ADVERTISEMENT 'Many developers in our coverage have less than one year of unsold inventory and strong balance sheets, giving them pricing and staying power,' HSBC Holdings analysts including Puneet Gulati wrote in a recent note. Still, concerns over aggressive new project launches and the risk of oversupply are weighing on future growth. Questions about whether the property cycle has peaked and if the pace of sales will continue has prompted some investors to take pause.For now, they're turning their attention to upcoming earnings season scheduled to kick off later this month. Key areas to watch include whether firms revise guidance upward for fiscal 2026 pre-sales and cash collection, according to Citigroup Inc. analysts.
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