The Sector Rally
The Nifty Realty index gained 28% in FY26, making it one of the top-performing sectoral indices. DLF, Prestige Estates, Sobha, and Macrotech (Lodha) drove much of the gains, all benefitting from a combination of strong pre-sales, land bank appreciation, and RBI rate cut expectations.
Fundamentals Check
Pre-sales velocity across top developers has been strong — Mumbai and Bengaluru luxury segments in particular saw record absorption. Unsold inventory is at multi-year lows in most metros. These are genuine fundamental improvements, not just sentiment.
The Risk
At 35–45x FY27 earnings for top names, listed real estate leaves little room for disappointment. Any slowdown in buyer sentiment — due to rate cuts not materialising fast enough or economic softening — could compress multiples rapidly. REITs (Embassy, Mindspace, Nexus) offer a more defensive exposure to the sector with 7–8% distribution yields.