Real Estate Stocks in India

What are real estate stocks?

Real estate (realty) stocks are property developers that build and sell homes, and companies that build and lease offices, shopping malls, warehouses and data centres. Residential developers earn money when they sell homes; commercial developers earn rent over many years.

Real estate has had long cycles in India. Rules introduced under the Real Estate (Regulation and Development) Act, 2016 (RERA), which require projects to be registered and buyers' money to be protected, have pushed the sector towards larger, better-governed developers.

Separately from these stocks, investors can also buy listed REITs (real estate investment trusts), which own rent-earning commercial property and distribute most of their income.

What moves real estate stocks

Home loan rates

Most homes are bought with a loan, so falling interest rates make homes more affordable and lift demand.

Sales bookings

Developers report pre-sales - the value of homes booked in a quarter - which leads revenue by several years because revenue is recognised as projects are completed.

New launches and approvals

A strong pipeline of projects, and approvals to start them, drives future bookings.

Office demand

For commercial developers, leasing by IT companies and global capability centres drives occupancy and rents.

What to check before investing in real estate stocks

Pre-sales and collections

Pre-sales show demand; collections - cash actually received from buyers - show whether it is turning into money.

Net debt

Borrowings minus cash. The sector's past troubles were largely caused by excessive debt.

Land bank and project pipeline

The land a developer owns or controls and the projects planned on it indicate future growth.

Execution and delivery record

A developer that delivers on time wins buyers' trust, and brand matters a great deal in residential property.

Risks to know

Real estate is highly cyclical and sensitive to interest rates. Delays in approvals or construction, heavy debt, and unsold inventory in a downturn are the main risks. Because revenue is recognised as projects are completed, reported profits can look very different from the actual pace of sales.

How to invest in real estate stocks

1. 1

   Open a demat and trading account

   A demat account holds your shares electronically; a trading account lets you buy and sell them. With GoPocket you can open both online in a few minutes with your PAN, Aadhaar and bank details.

2. 2

   Add money

   Transfer funds to your trading account by UPI or net banking.

3. 3

   Research the company

   Pick a company from the list above and open its page to see its share price chart, financial performance and shareholding before you decide. Compare it with other real estate stocks on business quality, debt, growth and valuation.

4. 4

   Place your order

   Search for the stock in the GoPocket app or web platform, choose the quantity, and place a delivery order to hold the shares in your demat account. A limit order lets you set the most you are willing to pay.

5. 5

   Track and review

   Follow the company's quarterly results and news. Spreading your money across several companies and sectors reduces the damage if one investment goes wrong.

Terms used on this page

LTP

Last traded price - the price at which the stock last changed hands. The figure below it is the change from the previous day's close.

Market cap

Market capitalisation: share price multiplied by the number of shares issued. It measures a company's size in the market and is shown here in rupees crore (1 crore = 1,00,00,000).

Cap band

Whether a company is large, mid, small or micro cap, based on its market capitalisation. Larger companies tend to be less volatile.

Sector and industry

The NSE groups companies into broad sectors (such as Financial Services) and narrower industries within them (such as Banks), based on what they mainly do.

Trading graph

How the share price has moved during the latest trading session, from the 9:15 open to the 3:30 close. The dashed line is the previous day's closing price.