The Indian real estate sector is experiencing significant growth, with the Nifty Realty Index showing an 8 percent increase year-to-date in FY25, outperforming the broader market indices by 4 percent.
UBS has taken notice of this momentum and has initiated coverage on the sector, projecting a promising future. The firm predicts that the sector will continue to grow due to factors such as high affordability, supportive regulatory reforms, increased consolidation among developers, stable interest rates, and favorable demographic trends.
UBS forecasts a compound annual growth rate of 15 percent in residential pre-sales from FY24 to FY29, highlighting the potential for sustained growth.
Key players in the sector, including Prestige Estates, DLF, and Oberoi Realty, are well-positioned to benefit from this upward trend. UBS has set target prices for these companies, indicating potential upside for investors.
The real estate market is influenced by several factors, including low inventory levels, high affordability, regulatory reforms, and favorable demographic trends. The commercial real estate segment is also expected to rebound strongly.
UBS believes that the current interest rate cycle has peaked and anticipates further rate cuts, which will further boost demand for real estate. While there may be near-term uncertainties, UBS advises investors to view any market dips as buying opportunities. The brokerage remains optimistic about the Indian real estate market, citing strong fundamentals, favorable market dynamics, and supportive policies.