Market Outlook: Nifty Realty outshines for 2nd consecutive year. Can it continue to hold the top spot in 2025? | Stock Market News

Market Outlook: The Nifty Realty index has been the top-performing sectoral index of 2024, delivering impressive returns to investors and outperforming broader market indices. This follows a remarkable 81% surge in 2023, marking two consecutive years of strong gains for the realty sector.

This year’s exceptional performance can be attributed to robust pre-sales figures, expanding project pipelines, and strategic market expansions by real estate companies. 

Realty index performance: A remarkable rally

The Nifty Realty index has risen 40 per cent on a year-to-date (YTD) basis, significantly outpacing the Nifty 50’s 13.5 per cent gain. Over the past year, the index has surged 48 per cent, compared to a 17 per cent rise in the benchmark index.

The index reached its all-time high of 1,157.35 in June 2024 and is currently trading at 1,092.40, just 6 per cent below its peak. It has soared 51 per cent from its 52-week low of 722.45 recorded in December 2023.

Notably, the index delivered positive returns in eight out of 12 months in 2024, with the highest gain of 9.3 per cent in January. Despite slight declines in March, July, August, and October, the index maintained its upward momentum, achieving a 7 per cent rise in December so far.

Investor-friendly policies, including increased foreign direct investment (FDI) limits and enhanced transparency in deal structures, have attracted substantial global capital into India’s real estate market. Additionally, record-high pre-sales figures reported by realty firms have significantly boosted investor confidence, highlighting robust demand in the sector. Furthermore, regulatory reforms and market consolidation among developers have contributed to greater stability and long-term growth prospects, making the sector an attractive avenue for investment.

Top Nifty Realty index gainers

All but one constituent of the Nifty Realty Index delivered positive returns in 2024. Raymond led with an 81 per cent surge, followed by Sobha (70.5 per cent) and Phoenix Mills (67 per cent). Other major gainers included Prestige Estates, Oberoi Realty, Godrej Properties, and Brigade Enterprises, which climbed between 40-50 per cent each. Meanwhile, Macrotech Developers (Lodha) and DLF also added 37 per cent and 21 per cent, respectively. However, Mahindra Lifespace was the only laggard, down over 6 per cent YTD.

Outlook: Can the realty index stay on top? 

The promising trajectory of the realty sector has garnered attention from analysts, with UBS, in particular, projecting a 15 per cent CAGR in residential pre-sales between FY24 and FY29, underpinned by factors such as stabilising interest rates, favourable demographics, and increased affordability.

UBS has issued ‘Buy’ ratings for Prestige Estates Projects Ltd. and DLF Ltd., citing strong execution capabilities and geographic diversification. Oberoi Realty received a ‘Neutral’ rating from the global brokerage firm due to valuation concerns.

Jathin Kaithavalappil, Assistant Vice President at Choice Broking, emphasised that urbanisation and post-COVID recovery will further bolster residential and commercial real estate segments.

The Indian realty sector’s exceptional performance in 2024 underscores its resilience and growth potential. With favourable policy support, rising demand, and robust pre-sales, the sector is poised for sustained growth in the coming years, according to experts.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.