Real estate stocks were pressured into trade on Friday, with the S&P BSE Realty index down nearly 6 percent. The new virus variable added to concerns about future growth and interest rates.
At 11:04 a.m. the S&P BSE Realty index, the biggest loser among the sectoral indices, was down 5.5 percent, compared to 2.3 percent in the S&P BSE Sensex. With Friday’s fall, the real estate index is down 13 percent from its 52-week high of 4,464 touched on November 9, 2021.
Among the individual stocks, shares of DLF, Phoneix, Oberoi Realty, Indiabulls Real Estate and Prestige Estates Projects fell in the 6 percent to 8 percent range. Godrej Properties, Sunteck Realty, Sobha, Macrotech Developers, Mahindra Lifespace Developers and Brigade Enterprises all fell 3 percent to 5 percent.
According to a New York Times report, scientists in South Africa on Thursday identified a worrisome new type of coronavirus, whose mutations represent a “big leap in evolution” that leads to a spike in new cases. Hours later, Britain banned flights from six South African countries, citing the alternative. Click here for the full report
Despite correcting more than 10 percent from a 52-week high, the BSE Realty index has outperformed the market with a 57 percent rise so far in calendar year 2021. By comparison, the S&P BSE Sensex is up 20 percent, it shows data .
“The pandemic has played a catalytic role in accelerating market share gains in the hands of regulated real estate players. Banks, equity capital providers, buyers and supply chains are aligned with stronger developers to further solidify this shift. Economic recovery, high attrition backed by rising salaries, strong stock markets, low interest rates, High affordability, the collapse of the Tier 2 developer ecosystem, new launches and the pursuit of large home/home ownership are some of the tailwinds fueling this recovery, analysts at HDFC Securities said in a recent report.
Adding, “While the sector may experience headwinds in the near term, the long-term story remains the same. We continue to believe that first-tier developers will gain market share, given the increasing consumer buying preference for reputable developers on projects under construction.”