Jefferies prefers Lodha Developers, Godrej Properties as top real estate bets; here's why

Global brokerage Jefferies has spotlighted Lodha and Godrej Properties as leading real estate picks, citing the likelihood of strong new launches and sales performance in the second half of FY26. The brokerage estimates its coverage universe may deliver around 25% pre-sales growth in FY26, signalling optimism despite a recent sector slowdown following the festive period. Jefferies maintains a positive outlook on Lodha and Godrej Properties, reflecting confidence in their capacity to navigate sector challenges and maintain new launch momentum as the year progresses.

The Nifty Realty Index is currently down about 20% from its 2024 high, and most stocks in the sector, including Lodha and Godrej Properties, are in volatile trade. India’s real estate stocks, from Prestige Estates to Brigade Enterprises and Oberoi Realty are in volatile phase of trading for sometime now.

Labour costs, which comprise 15% to 30% of project expenses, are under scrutiny as new labour laws come into effect.

The recently introduced labour regulations could result in 10% to 15% higher labour costs for developers, potentially raising overall development expenses by 3% to 4%.

According to Anuj Puri of Anarock Property Consultants, labour costs could rise 10% to 15% due to the new laws, potentially pushing up total development costs by 3% to 4%. This impact is expected to be more subdued in Mumbai, where labour typically accounts for around 20% to 25% of construction costs, excluding land.

Market experts indicate that these added costs are unlikely to be absorbed by developers. Puri added that developers are likely to pass on these costs to buyers rather than absorb them in their P&L accounts.