From Godrej To DLF: HSBC Raises Realty Stocks' Target Prices On Strong Demand

The strength of residential demand should continue in 2024 due to affordability, limited supply and a strong pipeline, HSBC said on Friday.

Despite the residential real-estate cycle being strong for three years, HSBC reiterated that the next year would also continue to witness sales growth, according to a note.

HSBC expects consolidation to continue as branded developers are set to increasingly use a joint-development route to bring their projects faster to market, even at the cost of paying a slight premium to landowners.

There are some segments that have lacked pricing discipline. But the larger market has remained affordable due to the salary growth witnessed in the past three years, resulting in demand remaining strong, it said.

Preference for new and larger-sized apartments and community-housing projects continues to see pricing growth, driving demand ahead of expected price rises, according to HSBC.

The brokerage maintains a 'buy' rating on Sobha Ltd. and Prestige Estates Projects Ltd.; 'hold' on DLF Ltd. and Godrej Properties Ltd.; and 'reduce' on Oberoi Realty Ltd. It has also raised the target prices.