FPIs lap up realty stocks amid low inventories, sustained demand scenario
The increase in the weight of the sector can be attributed to capital appreciation and steady inflow of overseas funds. The Nifty Realty index has outperformed the benchmark Nifty 50 by 32% year-to-date.
ET Intelligence Group: The , which contributes approximately 7% to India’s GDP and is the second largest employment generator after agriculture, has emerged as a top choice among () — thanks to their focus on consumption-driven . The sector’s weight in the FPI equity portfolio doubled year-on-year to a record 2.4% in the middle of June 2024. It was also higher than the long term average weight of the sector at 1.5%.The increase in the weight of the sector can be attributed to capital appreciation and steady inflow of overseas funds. The index has outperformed the benchmark by 32% year-to-date. In addition, the sector has attracted $1.1 billion (Rs 9,482 crore) from FPIs since the beginning of 2024 even though they sold $3.1 billion (Rs 26,165 crore) worth of Indian equities by June 15. Overseas investors have been net buyers of Indian real estate stocks in nine out of eleven fortnights this year.
The optimistic guidance provided by real estate companies for the current fiscal year has played a significant role in attracting FPI money. The top seven listed real estate firms anticipate pre-sales growth of 15-25% for FY25. While pre-sales saw robust growth of 25-30% in the first two months of FY25 across major cities, the momentum slowed in June due to election-related uncertainties. Another momentum driver is that inventories for the trailing twelve months are at a multi-month low of less than 16 months, indicating healthy demand conditions. At the same time, affordability is at a 2.5-decade best according to the index. These factors may help realty companies to achieve their full-year guidance.
The assets under management (AUM) of the FPIs’ realty portfolio has increased by 133% to $19.75 billion over the past year, marking one of the highest growth rates among major sectors
Source: Stocks-Markets-Economic Times
