Nifty Realty index hits 52-wk high; DLF, Sunteck, Oberoi Realty up over 2%

Shares of real estate companies advanced at the bourses on Thursday, gaining up to 6 per cent on the National Stock Exchange (NSE), after the State Bank of India (SBI) launched a Residential Builder Finance with Buyer Guarantee (RBBG) scheme to safeguard home buyers financially.

Sunteck Realty, Indiabulls Real Estate, DLF and Oberoi Realty were up more than 2 per cent each on the NSE in the intra-day trade today. Meanwhile, Sobha, Mahindra Lifespace Developers, and Godrej Properties gained in the range of 1 to 2 per cent.

Nifty Realty index, too, hit a 52-week high of 303.35 today, up 2 per cent on the NSE. The index surpassed its previous high of 302.40 touched on January 2, 2020.

On Wednesday, SBI announced RBBG to safeguard home buyers financially by issuing guarantee for completion of projects to customers availing SBI Home Loans.

"With this, customers will be able to secure their investment in the ongoing home projects financed by the bank itself. RBBG will focus on affordable housing segment with home price of up to Rs 2.5 crore in seven Indian geographies initially. Under this product, all reputed builders fulfilling the prescribed criteria by the bank can avail loan between Rs 50 crore to Rs 400 crore. The criteria include Star rating and CIBIL score," SBI said in a statement.

SBI and Sunteck Realty have entered into a Memorandum of Understanding (MoU) which is the first step towards boosting the residential housing sector under the Bank’s “Sapna Aapka – Bharosa SBI Ka” scheme with bank guarantee to home buyers under the Builder Finance scheme. Following the news, the stock of Sunteck Realty surged 6 per cent to Rs 450 on the NSE in intra-day trade today.

In the past three months, Nifty Realty index has outperformed the market by surging 21 per cent, largely driven by DLF -- which delivered 59 per cent returns. In comparison, the benchmark Nifty 50 index was up 7.6 per cent during the same period.

"Whilst residential markets remain muted, cap rate compression has started reflecting in stock prices. Though there is a marginal recovery in the premium segment viz. Gurgaon for DLF and in pockets of Mumbai, the overall sentiment still remains muted," according to analysts at HDFC Securities.

“On the back of Government measures to revive real estate, buying sentiment is improving which may drive overall demand over the next few quarters. The commercial leasing is robust and vacancy is reducing, while developers planned fund raising over the next one year will result in deleveraging,” the brokerage firm said in Q3 results preview.