What Does Nuvama’s Real Estate Outlook Indicate For Indian Housing Markets?

Nuvama Institutional Equities has released its latest insights on India’s real estate sector, highlighting a shift in market dynamics post the strong housing cycle of FY21–24. The brokerage believes that the homogeneity of the previous growth phase is unlikely to continue, with different cities now showing varying growth patterns. For investors, this assessment is crucial in identifying where opportunities remain resilient and where risks of slowdown are emerging. Alongside this broad outlook, Nuvama has named Prestige Estate and Brigade Enterprises as its top stock picks, each backed with Buy ratings and robust target prices.

Diverging Trends Across Indian Cities

According to the report, Bengaluru and Chennai remain well-positioned to continue on their upward trajectory, supported by robust IT-driven demand, affordability, and healthy supply absorption. On the other hand, Hyderabad, which witnessed one of the steepest climbs in property values, appears to have passed its peak. The Mumbai Metropolitan Region (MMR) is currently at a mid-cycle stage, suggesting stable but not explosive growth, while Pune is showing signs of "growth fatigue." Gurugram, though aspirational, faces affordability challenges that may cap demand momentum.

Sector-Wide Investment Sentiment

The brokerage notes that while demand fundamentals remain strong in select cities, stock market valuations may not fully capture the divergence. Thus, selective investing becomes critical, and investors should focus on developers with strong balance sheets, scalable project pipelines, and exposure to growth markets rather than chasing sector-wide momentum.

Nuvama’s Top Picks: Prestige And Brigade

Prestige Estate continues to be one of the most consistent performers in the residential segment, with a strong pipeline across Bengaluru and other southern cities. Its execution track record and growing presence in commercial real estate add to the growth visibility. Brigade Enterprises, another Bengaluru-based developer, benefits from its balanced portfolio of residential, office, and hospitality projects. Both names are well placed to capitalize on demand in growth-centric cities while navigating sectoral volatility.

Challenges For Select Markets

Pune’s fatigue stems from oversupply and reduced incremental demand from IT/ITeS players, while Gurugram faces pricing mismatches in premium housing segments. Developers in these regions may need to recalibrate pricing strategies to sustain volumes. Meanwhile, Hyderabad, after years of sharp growth, might witness a slowdown as demand-supply dynamics rebalance.

Macro Drivers And Policy Landscape

With metro expansion, smart city initiatives, and focus on urban infrastructure, housing markets in Tier-1 and Tier-2 cities continue to benefit. However, financing costs, interest rate cycles, and consumer affordability will dictate near-term demand momentum. Institutional participation in rental housing and REITs could also provide a structural uplift to the sector in coming years.

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Investor Takeaway

Nuvama’s analysis underscores that India’s real estate sector is entering a more fragmented cycle. Bengaluru and Chennai remain attractive growth hubs, while Hyderabad, Pune, Gurugram, and MMR face mixed challenges. For equity investors, the message is clear: focus on selective high-quality developers like Prestige and Brigade that have strong pipelines and exposure to growth markets rather than betting broadly on the sector.

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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.