Realty Stocks Bullish In December, Residential Real Estate Sector To See Lower Volatility In 2022: Analysts

The Indian real estate segment, which has remained under tension for more than a year, has started to recover. Additionally, the Covid pandemic has pushed the sector to transform than ever before.

Analysts are thinking that the Indian residential real estate sector can expect a 'long-term upcycle, and 2022 is very likely to fare better than 2021.' the pandemic has now part of people's lives, and they have adopted the challenges caused by the Covid. 'Indians getting used to the new normal, businesses are looking to expand.' The residential real estate market in 2022, is expected to see lower volatility, than the previous year.

Anuj Puri, Chairman of ANAROCK Group commenting on the real estate sector, said, "Reviewing the overall performance of the Indian residential real estate market in 2021 shows a definite upswing. Between Jan-Sep 2021, 1.63 lakh units of new residential supply were added across the top 7 Indian cities - 27% higher than 2020 full year supply, and 1.45 lakh units were sold - 5% higher than in the whole of 2020." ANAROCK Group is now anticipating that new real estate supply and sales may reach 2019 levels by 2022, interest rates may start inching up from H2 2022, while real estate prices might appreciate in the range of 5% - 10%.

Puri added, "While this depicts a cumulative trend, the Indian residential real estate sector's comeback after the 2nd wave in Q2 2021 was phenomenal, sharp V-shaped one." In Q3 2021, the sector's supply was 64,500 units, 1.8X of Q2 2021, while the Q3 2021 sales stood at 62,800 units, 2.6X of Q2 2021. This shows a clear growth rate in the segment.

However, in India, around 1/3rd of the overall residential area is being sold by the large listed and unlisted players. Only developers with adequate financial strength, brand name, execution track record, and corporate governance are anticipated to witness growth and success in the future, the analyst thinks.

Real estate stock boom

New launches, sales, etc. have encouraged investors to trade money in the sector, which helped the real estate stocks to rally. In a recent data release, ANAROCK Group said, "The S&P BSE Realty Index (the broad indicator of real estate stock performance) was at 1,423 on March 27, 2020 (just after the announcement of the nationwide lockdown). On January 1, 2021, it was at 2,501 and as of mid-December 2021, it was at 4,028. The phenomenal momentum in the overall real estate market is clearly visible in the index movement."

Ample liquidity has targeted the stock markets this year in India, and domestic investors played a significant role. Indian have continued to work from home largely, has been another reason behind the realty stock gain in the domestic markets. Additionally, the low-interest rates on home loans have also been a support for the sector to boom.