Phoenix Mills, DLF, Godrej Properties: Realty stocks gain big, NIFTY REALTY index surges 3.6%; what lies ahead?

Stock market today: Shares of real estate companies were in heavy demand on Wednesday, April 2, amid a decent rise in the benchmark indices.

The NIFTY REALTY index jumped 3.61% to end at 854.65 levels.

The NIFTY REALTY index is designed to reflect the performance of real estate companies that are primarily engaged in the construction of residential and commercial properties.

In the past month, the index has risen over 5%. However, it has fallen around 20% in six months and over 10% in the past 12 months.

All the 10 constituents ended in the green.

Why real estate stocks surged

The rise in real estate stocks could be attributed to the hopes of rate cuts by the RBI.

There are expectations that the Reserve Bank of India (RBI) will cut the repo rate in the upcoming monetary policy meeting next week (April 7-9).

This means lower home loan rates, which could propel the purchase of homes, thus benefitting the real estate developers.

Care Edge Ratings, according to a news report, in its latest report said the monetary policy committee will go for another 25-basis-point reduction in the repo rate at the April 7-9 meeting. Care Edge also anticipates RBI to maintain a "neutral" stance amidst global headwinds.

Remember, the RBI, in its last monetary policy meeting, which was held between Wednesday, February 5, and Friday, February 7, decided to cut the repo rate by 25 basis points (bps) to 6.25% from 6.5% earlier. This was the RBI's first monetary policy meeting in the calendar year 2025.

Realty sector outlook 2025

Residential real estate is expected to grow at a CAGR of 8 to 10% by 2025, while commercial real estate trends of 2025 project a growth of 6 to 8% CAGR, thanks to IT and financial services demand, the blog said.

The real estate sector in India is expected to reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021, and contribute 13% to the country’s GDP by 2025.

Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs, the report added.

"Sustained confidence of domestic and international investors is widely anticipated to remain unabated. While residential and office markets can potentially stabilise after consecutive peaks, industrial & warehousing demand can witness heightened traction," it said.

Meanwhile, there is an increase in ready reckoner (RR) rates in Maharashtra. According to news reports, the government of Maharashtra has increased RR rates, which determines property valuations for stamp duty and taxation, for the financial year 2025-26 across the state after keeping it unchanged for the last two years.

The state government has announced an average increase of 3.89% in ready reckoner rates for the financial year 2025-26.

Solapur will experience the sharpest increase at 10.17%, followed by Ulhasnagar at 9%, Nashik at 7.31%, Thane at 7.72%, Pune district at 6.8%, and Navi Mumbai at 6.75%. Mumbai, the state’s commercial capital, will see a 3.4% increase, slightly below the state average, reports said.