Top 10 Real Estate Stocks in India (2024)

Last Updated on Mar 1, 2024 by Anjali Chourasiya

One of the most globally recognised sectors in the world is the real estate sector. It comprises of four sub-sectors – housing, retail, hospitality, and commercial. In India, the sector is the second-highest employment generator after the agriculture sector. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. In this article, let’s look at the best real estate stocks in India based on different factors, along with the meaning, overview of the Indian real estate sector, and factors to consider before investing in real estate stocks in India.

Best real estate stocks in India (2024)

Note: The data is from 29th February 2024. To get this list of top real estate stocks in India on the Tickertape Stock Screener, apply the below-mentioned filters.

• Sector > Real Estate
• Fundamental Score: Sort from highest to lowest
• 1Y Return: Positive (Set the lower limit to zero)
• Net Profit Margin: Set to High
• Net Income: Positive (Set the lower limit to zero)

Fundamental Score: It is a smallcase proprietary score between 1 and 10 assigned to stocks listed on NSE. The score helps rank the stock over other stocks in the respective sector. The higher the score, the better the company. The score is calculated considering factors like valuation, profitability, market share growth, financial health and earnings growth of the company.

Top real estate stocks in India – 1-yr return

Note: The data is from 29th February 2024. To get this list of the top 10 real estate stocks in India on the Tickertape Stock Screener, apply the below-mentioned filters.

• Sector > Real Estate
• 1Y Return: Positive (Set the lower limit to zero)

Best realty stocks in India (2024) – Daily volume

Note: The data is from 29th February 2024. To get this list of the top 10 real estate stocks in India on the Tickertape Stock Screener, apply the below-mentioned filters.

• Sector > Real Estate
• Daily Volume: Sort from highest to lowest

Top realty stocks in India – 5Y CAGR

Note: The data is from 29th February 2024. To get this list of top 10 real estate companies in India on the Tickertape Stock Screener, apply the below-mentioned filters.

• Sector > Real Estate
• 5Y CAGR: Sort from highest to lowest

Note that these stocks are in no order of preference. Please note that these stock selection criteria and the stocks are provided for informational purposes only; it is essential to conduct your own research.

What are real estate stocks?

Real estate stocks are like little pieces of companies that deal with real estate. These companies could be involved in owning, building, or taking care of real estate properties. When we talk about real estate stocks, a big chunk of them are Real Estate Investment Trusts (REITs).

Now, what are REITs? They are like investment vehicles that own and sometimes run real estate that makes money, like apartments, offices, warehouses, or shops. So, when you buy shares in a REIT, you’re kind of investing in a mix of different real estate properties.

One notable characteristic of REITs is their propensity to distribute a substantial portion of their earnings as dividends to shareholders. So, if you have real estate stocks or REIT shares, it’s like having a little piece of different properties and getting a share of the money those properties make.

Factors to consider when before investing in real estate stocks in India

Here are some key factors to consider before investing in real estate stocks.

• Market research: Conduct thorough research on the current state of the real estate market in India. Analyse trends, demand-supply dynamics, and factors influencing property values.
• Economic conditions: Evaluate the broader economic conditions, including interest rates and inflation, as they can have implications for the real estate sector.
• Regulatory environment: Stay informed about the regulatory framework governing real estate in India. Changes in regulations or policies can have a substantial impact on the industry.
• Company performance: Assess the financial health and performance of potential real estate investments. Examine factors such as revenue growth, profitability, and debt levels.
• Type of real estate stocks: Understand the specific focus of the real estate stocks under consideration, such as residential, commercial, or industrial. Different sectors may present varied risk-return profiles.
• Location and geography: Analyse the geographical areas where real estate companies operate. Regional factors can influence property values and demand.
• Development projects: If considering companies involved in development projects, evaluate the progress and potential of these projects. Delays or issues can impact financial performance.
• Debt levels: Consider the debt-to-equity ratio of real estate companies. High levels of debt can pose financial risks.
• Dividend yield: Assess the dividend yield offered by Real Estate Investment Trusts (REITs), but also examine the sustainability of these payouts.
• Risk tolerance: Evaluate your risk tolerance and investment horizon. Real estate investments can be subject to market volatility.
• Liquidity: Check the liquidity of the stocks. High liquidity ensures ease of buying or selling shares without a significant impact on prices.
• Diversification: Consider real estate stocks as part of a diversified portfolio to spread risk across different assets.
• Long-term outlook: Recognise that real estate investments often require a longer investment horizon. Align your investment goals with the characteristics of the real estate market.

Benefits of Investing in Real Estate Stocks

Investing in real estate stocks offers benefits such as

Diversification

Investing in real estate stocks will provide a very strategic way in which to ensure that investment portfolios are diversified. Diversification is common in ensuring a sound investment strategy, whereby an investor has to spread their investment across different asset classes in order to reduce the level of risk. 

Real estate stocks are considered to belong to a different asset class, showing dissimilar behaviour from equities, bonds, and commodities. When added, real estate stocks in a portfolio may help dampen the impact of volatility inherent in any single market, potentially stabilising returns over time. This sector-specific diversification allows the characteristics of the real estate market, like its cyclicalness and sensitivity of interest rates, to be properly used to add, not compete, with other investments in managing overall portfolio risk.

Liquidity

Real estate stocks offer liquidity compared to physical real estate investments. Real estate stocks exchange hands and can be traded over stock exchanges at the convenience of the investor, offering a quicker way of realising capital if and when needed. Such liquidity is especially valuable in choppy markets or when personal circumstances are such that quick access to funds is dictated. Unlike real estate, which often takes months to sell, stocks are almost immediately liquid, offering a huge advantage to the investor needing flexibility and timely access to his or her investment.

Dividend income

Most real estate firms, particularly Real Estate Investment Trusts (REITs), pay a share of their earnings to the shareholders as dividends, thus providing another source of passive income. Such dividends can be quite luring for income-oriented investors or those looking to raise their income levels. However, thorough research needs to be done prior to investing in the stocks of real estate that pay dividends. It will be quite an insightful look into the historical performance of the company, its dividend payout history, and its financial health. However, it is worthwhile to research thoroughly about the stock, it’s historical performance, and dividend history, and consult a professional before investing.

Risks Associated with Real Estate Stocks

• Market volatility: Real estate stocks, as with the general real estate market, have a high sensitivity level to economic cycles. During economic booms, stock markets, particularly real estate stocks, tend to gain substantially because of increased demand for property, higher rental income, and favourable terms in financing. On the flip side, real estate stocks dive during economic downswings, plunging consumer confidence, expensive borrowing, and fall in occupancy rates. This cyclical nature makes real estate stocks a potentially volatile investment, where timing and market conditions can greatly impact performance.
• Regulatory changes: Real Estate operates within a multifaceted regulatory environment, sometimes changing due to shifts in political climates and policy priorities. New laws and regulations in zoning, land use, environmental protection, and controls in the rental market can greatly affect the profitability and operational functionalities of real estate firms. These can include stringent environmental regulation, which increases costs to developers, and changes to rent control laws, which may impact income streams for real estate investment trusts (REITs). It is the responsibility—burden of investors—to be aware that regulations are under consideration for change and that they have the potential to influence the way that an investor’s real estate is held.
• Fluctuations in interest rates: Interest rates are very fundamental in the real estate sector, as they determine the cost of borrowing for companies and consumers in general. Real estate development and activity undertaken by real estate companies are majorly funded by borrowing, where debt financing is done for the development projects and acquisition, respectively. Higher interest rates result in higher borrowing costs; as such, those firms will consequently squeeze profit margins and even lessen their cash flow. What is more, higher mortgage rates, in tempering the residential market’s demand, could directly or indirectly impact firms involved in residential development and sales. On the other hand, low-interest rates can encourage borrowing and investment, benefiting real interest and shares of real estate. Investors who consider owning real estate stocks definitely should have a clear idea about the relationship between interest rates and the dynamics of the real estate market.

Overview of the Indian Real Estate Sector

The Indian real estate market is expected to expand from USD 0.33 trillion in 2024 to USD 1.04 trillion by 2029, with a CAGR of 25.60%. Key growth drivers include the rising demand for data centres and luxury homes, with a 130% increase in luxury home sales in the first half of 2023.

The Union Budget 2023-24 significantly boosts the sector with a Rs. 79,000 crore allocation for affordable housing under the Pradhan Mantri Awas Yojana. FDI policies have also been liberalized to encourage investment in the sector.

Further, the private equity investments reached US$ 4.2 billion in 2023, with FDI in real estate hitting US$ 58.5 billion from April 2000 to September 2023.

Investment Insights and Trends

The industry’s PE ratio stands at 68.1x, surpassing the 3-year average of 54.0x, indicating investor optimism. The sector’s transition into profitability is marked by a 26% annual growth in revenues. With SEBI’s approval, REITs present a significant opportunity, potentially worth Rs. 1.25 trillion, for investors looking for the best REIT stocks in India.

Well, these are enough reasons for an investor to consider investing in the sector. However, to invest in any sector or stock, a thorough analysis is required. For this purpose, Tickertape provides you with comprehensive research, analysis, and investing tools. 

 With Tickertape Stock Screener, you can list stocks based on your preferred criteria. There are over 200 filters for you to choose from, along with pre-built screens, which make your analysis faster.

Further, the Scorecard on every asset page helps you dive deeper into the stock and analyse the stock based on quantitative factors such as profitability, performance, entry and exit points, valuation, and growth and provides a sneak peek into the potential red flags in the stock. Research, analyse, and invest quicker than before, because #TickertapeHaiNa! Become a Pro Member now!

FAQs about real estate stocks

What are the top 5 real estate stocks in India?

The top 5 real estate stocks in India based on the 1-yr return are:

• Prime Industries Ltd
• Unitech Ltd
• Gyan Developers and Builders Ltd
• Hazoor Multi Projects Ltd
• RDB Realty & Infrastructure Ltd

Are real estate stocks a good investment?

Depending on your financial goals and market conditions, real estate stocks can be a good investment. These stocks also present opportunities for both dividends and capital appreciation. However, given the inherent risks, conducting thorough research and adopting a diversified approach are imperative to make well-informed investment decisions.

How to invest in real estate stocks?

For a thorough analysis, Tickertape provides you with comprehensive research, analysis, and investing tools. With Tickertape Stock Screener, you can list stocks based on your preferred criteria. There are over 200 filters for you to choose from, along with pre-built screens, which make your analysis faster.

Further, the Scorecard on every asset page helps you dive deeper into the stock and analyse the stock based on quantitative factors such as profitability, performance, entry and exit points, valuation, and growth and provides a sneak peek into the potential red flags in the stock. Research, analyse, and invest quicker than before, because #TickertapeHaiNa! Become a Pro Member now!

What are dividend-paying real estate stocks?

Here are the top 5 dividend-paying real estate stocks based on dividend yield:

• Brookfield India Real Estate Trust REIT
• Embassy Office Parks REIT
• Nirlon Ltd
• Mindspace Business Parks REIT
• Oswal Greentech Ltd

These stocks are based on 29th February 2024 and are sorted using ‘Dividend Yield’ on Tickertape Stock Screener. Add over 200 filters to sort the list based on your preference. Try it out now!

Are REIT stocks safe?

Publicly traded Real Estate Investment Trusts (REITs) provide investors with an avenue to incorporate real estate into their investment portfolios or retirement accounts while earning appealing dividends. Compared to non-exchange traded counterparts, publicly traded REITs are generally considered a safer option. However, it’s crucial to acknowledge that, like any investment, they are not entirely risk-free. Factors such as market fluctuations, economic conditions, and specific challenges within the real estate sector can impact the performance of publicly traded REITs. Therefore, while they offer an attractive dividend, investors should remain vigilant, assess their risk tolerance, and stay informed about potential risks associated with their investment in publicly traded REITs.

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Anjali Chourasiya

I am a finance enthusiast who loves exploring the world of money through my lens. I’ve been dedicated to building systems that work and curating content that helps people learn.

As an insatiable reader and learner, I’ve spent the last two years exploring the world of finance. With my creative mind and curious spirit, I love making complex finance topics easy and fun for everyone to understand. Join me on my journey as we navigate the world of finance together!

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