Gurugram Real Estate Market Faces Affordability Challenge; Hyderabad Likely Past Its Peak: Nuvama Report
The real estate landscape across India is witnessing a shift, as highlighted in the latest report by Nuvama Institutional Equities. Marked by dynamic changes from fiscal years 2021 to 2024, the report suggests the era of uniform growth in India’s housing markets may soon become a thing of the past. The report offers a detailed outlook on key regional markets including Gurugram, Hyderabad, Bengaluru, Chennai, Mumbai Metropolitan Region (MMR), and Pune.
Hyderabad Housing Market Likely Past Its Peak
According to Nuvama, Hyderabad’s housing market has likely reached its saturation point. Growth momentum appears to have plateaued after several years of robust expansion, indicating the market is past its peak cycle. This suggests that while Hyderabad has been a hotspot for real estate development and demand in recent years, buyers and investors might expect a slower phase moving forward.
Mixed Sentiments Across Major Markets
Bengaluru and Chennai continue to demonstrate growth potential, with their housing markets still showing signs of upward momentum. These cities are expected to sustain demand and expansion in the near to medium term.
Mumbai Metropolitan Region (MMR) stands at a mid-cycle phase, implying a somewhat balanced stage with neither rapid growth nor significant slowdown.
Pune is experiencing what the report terms as “growth fatigue,” signaling a slowdown in market enthusiasm and demand.
Gurugram Confronts Affordability Challenges
In contrast, Gurugram’s real estate market faces a distinct challenge — affordability. This constraint poses a risk to housing demand and volume growth as the cost of homes rises beyond the reach of many potential buyers. Affordability issues could temper sales velocity and impact developers' pricing strategies.
Market Sentiment and Stock Outlook
Nuvama anticipates cautious sentiment around the real estate sector in the near term. Factors contributing to this caution include:
Weak volume growth driven by reduced affordability.
Lower hiring rates attributable to tariff-related economic concerns.
A slow recovery in overall economic growth.
This cautious outlook extends to real estate stocks, which Nuvama expects to remain range-bound amid continued market volatility. The brokerage foresees downside risks being mitigated by falling mortgage rates, but upside gains capped by valuation concerns and lack of strong volume growth. Additionally, with moderation in price increases, investor-led demand for real estate is likely to decline.
Top Real Estate Stock Picks by Nuvama
Despite the challenges, Nuvama favors certain real estate stocks:
Prestige Estates: Rated as a 'Buy,' with a target price of Rs 2,009 per share, indicating an upside potential of over 21% from the recent closing price.
Brigade Enterprises: Also a 'Buy' call, with a target price of Rs 1,437 per share, offering nearly 51% upside potential.
These picks suggest confidence in these companies' ability to navigate through current market dynamics and deliver value to investors.
This report by Nuvama underlines the evolving nature of India’s real estate markets and highlights the varying trajectories across major urban hubs. As affordability challenges become more pronounced in Gurugram and Hyderabad’s market cools off, investors and homebuyers will need to exercise caution and stay attuned to shifting trends in supply, demand, and economic factors.