Adversitement
Nifty Realty Index Surges 132% in FY24, Prompts Launch of Real Estate ETF
Published On : 2024-03-31T15:10:55+0530 [ IST ] |
Author : Mayur_Tembhare
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In a testament to the resilience of India's real estate market, the Nifty Realty index has experienced a remarkable surge of 132% in fiscal year 2023-24 (FY24). This surge, which marks a 2.3-fold increase in the index's value, reflects the sustained demand for housing and the notable performance of the office sector throughout the fiscal year.
The buoyancy in real estate stocks has not gone unnoticed, prompting Motilal Oswal Asset Management to introduce the first exchange-traded fund (ETF) centered on the real estate sector. This move underscores the investor confidence in the sector's growth prospects and offers a new avenue for investors to participate in this flourishing market segment.
Examining the performance of the Nifty Realty index over the past five years reveals a compelling trajectory. Despite the challenges posed by the COVID-19 pandemic, the index demonstrated resilience, with a modest 4.8% increase in calendar year 2020. Subsequently, in 2021, the index witnessed a significant uptick of over 54%, signaling a robust recovery. The momentum continued in 2023, with the index surging by more than 81%, followed by a further increase of over 15% in the first quarter of 2024.
A closer look at the constituents of the index reveals a notable price rally, with leading players such as Sobha Ltd and Prestige Estates Projects witnessing substantial appreciation in their stock prices. This robust performance underscores the market's confidence in these companies' growth prospects and their ability to capitalize on the prevailing demand dynamics.
Despite the backdrop of rising interest rates and escalating home prices, the demand for housing has remained resilient. Developers have adapted by offering attractive payment terms and incentives to buyers, driving home sales higher. In 2023, home sales in the top seven cities of India surged by nearly a third, reaching 4.8 lakh units, according to Anarock Research. Moreover, the first three months of 2024 saw a further uptick, with sales rising by 14% to 1.3 lakh units.
While Mumbai and Pune continue to dominate housing demand, other cities are also witnessing robust activity. Property prices have recorded notable increases across various cities, reflecting the underlying demand-supply dynamics and the willingness of buyers to invest in real estate assets.
In addition to the residential segment, the office sector has also displayed resilience, with significant absorption of commercial space observed in recent quarters. The gross leasing volume in 2023 reached close to 60 million square feet, with the first quarter of 2024 witnessing a year-on-year increase of one-third, driven by key markets such as Mumbai and Bengaluru, according to Cushman & Wakefield.
Looking ahead, analysts remain optimistic about the sustained growth momentum in the real estate sector. While challenges such as buyer fatigue in certain pockets and fluctuations in demand may arise, the overall outlook remains positive. With continued investor interest and supportive policy measures, the real estate sector is poised for further expansion, offering opportunities for investors and developers alike.
Source : Business Line
Tags : Interest Rates , exchange traded fund , Nifty Realty index , housing demand , ETF , leasing volumes. , office sector , Motilal Oswal Asset Management , home sales , FY24 , real estate stocks ,
Summary : The Nifty Realty index has witnessed remarkable growth in FY24, rising 2.3 times and delivering absolute returns of over 132%. This surge, driven by continued demand for housing and a resilient office sector, has led to Motilal Oswal Asset Management launching the first exchange-traded fund (ETF) based on real estate stocks. Despite challenges such as higher interest rates and rising home prices, developers have incentivized buyers with easy payment terms, contributing to increased home sales. While Mumbai and Pune dominate housing demand, the office sector has also shown significant absorption, with leasing volumes up by a third year-on-year.
Adversitement