Prestige Estates, Brigade Enterprises shares remain Nuvama's top picks in real estate; here's why

Housing sales by value improved 16 per cent year-on-year (YoY) and 2 per cent, sequentially (month-on-month) in November this year, said Nuvama Institutional Equities.

"The ongoing premiumisation trend in India's property space implies that volume-value trends have diverged sharply. By volume, supply/demand in the top-7 cities fell 53 per cent YoY/7 per cent YoY in November 2024; by value, however, while supply dipped 44 per cent YoY, demand rose 16 per cent YoY. YTD (year-to-date) supply/demand by value increased 9 per cent/13 per cent YoY. Unsold inventory by value rose 5 per cent YoY, but inventory months edged down YoY to 16 months (17 months in October 2024)," the domestic brokerage stated.

It added strong launch pipelines in H2FY25, increased focus on business development and potential rate cuts should boost housing sales going ahead.

To recall, the Reserve Bank of India (RBI) has maintained the key policy repo rate at 6.5 per cent since February 2023. Market watchers believe that the central bank may reduce the interest rates in its next monetary policy committee (MPC) meeting, scheduled in February 2025.

On the stock-specific front, Nuvama has maintained its 'Buy' calls on Prestige Estates Projects Ltd and Brigade Enterprises Ltd. "We believe realty stocks are attractive from a medium-term perspective in light of rising consolidation. With investors increasingly gaining confidence about housing sales trajectory, we believe the odds for the next leg of re-rating are high for developers with sizeable land banks. Prestige Estates and Brigade remain our top picks in the housing space," it mentioned.

"Developers with robust balance sheets shall also benefit from attractive business development opportunities. Overall, we reckon stronger players would gain market share going ahead," it further underscored.

Shares of Prestige Estates and Brigade have seen a decent pick up in the calendar year 2024 so far by rising 47.20 per cent and 41.13 per cent, respectively. This was against an 8.58 per cent rise in benchmark BSE Sensex during the same period.

Meanwhile, domestic indices will remain closed today on account of Christmas. It will resume action on December 26 (Thursday).