What's Driving The Rally In Real Estate Stocks?

The resurgence of stock markets to all-time high levels has thrust the real estate sector into the limelight, making it the most sought-after talk of the town. Is the real estate cycle turning for the better? Does the sector present an opportunity for investors? In the article below Shreya Chaware provides some insight.

- Shreya Chaware

The real estate sector was severely hit by the first wave of the pandemic. All activities were brought to a grinding halt and laborers were forced to migrate to their hometowns. As circumstances slowly improved, the economy reopened and a semblance of normalcy arrived. There was a healthy revival across the board during the January-March quarter, but the second wave of the pandemic wreaked havoc. However, it was just a speed bump as this time the real estate sector experienced a comparatively lesser impact. Agility and resilience in the face of continuous change were the mantras employed.

The exodus of laborers was better managed with developers committing to arrange their accommodation on-site. As restrictions eased in two months, all operations were up and running in no time. The BSE Realty index rose like a phoenix from the ashes and recently touched 3,343.25, recording its highest close since December 2010. The index has persistently grown by leaps and bounds over the last couple of months. Sensex furnished returns of 5.84 per cent during the last six months while the Realty index climbed 16.45 per cent, beating the benchmark by a wide margin. A similar trend can be observed over varied time horizons in the table below. Let’s delve deeper and understand the various factors at play that are driving the rally in real estate stocks.

Government Reliefs