Best Real Estate Stocks in September 2024 – Based on 5Y CAGR

The real estate sector is one of the most globally recognised sectors. It consists of four subsectors: housing, retail, hospitality, and commercial. The expansion of this sector is largely supported by the expansion of the business environment and the demand for office space and urban and semi-urban housing. The real estate business is India’s second-largest employer, trailing only agriculture. 

The real estate market will likely grow to ₹65,000 crore (US$ 9.30 billion) by 2040 as compared to ₹12,000 crore (US$ 1.72 billion) in 2019. The real estate sector in India is anticipated 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. In this article, we will explore the best real estate stocks in September 2024 based on 5Y CAGR.

Best Real Estate Stocks in September 2024 – Based on 5Y CAGR

Note: The list of stocks in the real estate sector have been sorted based on 5Y CAGR and as of September 11, 2024.

Overview of 5 Best Real Estate Stock

1. Brigade Enterprises Ltd: Established in 1986, Brigade Enterprises Ltd is a real estate developer in South India based in Bengaluru and expanding its area of operations in other parts of India. It has completed over 250 buildings aggregating over 70 mn. sqft of developed space. During Q1 FY25, the company’s revenue share was contributed 65% by Real Estate, 24% by Lease Rentals, and the remaining 11% by Hospitality.

Key Metrics:

• Return on Equity (ROE): 11.7%
• Return on Capital Employed (ROCE): 12.7%

2. Prestige Estates Projects Ltd: Prestige Estate Projects has a diversified business model across various segments, viz., Residential, Office, Retail, Hospitality, Property Management, and Warehouses, with operations in more than 12 major locations in India. The company has an ongoing/upcoming project portfolio of 108 projects covering 189 msf of the total development area (TDA) across all segments. During Q1 FY25, the company has deepened its presence in South India and is looking to recreate past success in NCR as well. 

Key Metrics:

• ROE: 12.9%
• ROCE: 14.9%

3. DLF Ltd: DLF Ltd, with its subsidiaries, associates and JVs, is engaged in real estate development, from the identification and acquisition of land to the planning, execution, construction and marketing of projects.  The company is building organisational capabilities, strengthening project management/ sales organisation and enhancing digital capabilities to improve efficiency and controls. The company is carrying a cash balance of about₹5,000 crores in RERA accounts alone. 

Key Metrics:

• ROE: 6.95%
• ROCE: 5.74%

4. Phoenix Mills Ltd: Phoenix Mills Ltd is engaged in the operation & management of malls, construction of commercial & residential property and hotel business in India. India’s leading retail mall developer and operator with approximately 0.64 million square meters of retail space spread across 9 malls in 6 gateway cities of India. During Q1 FY25, the company recorded a YoY growth of 12% in consolidated income from operations to ₹904 crore. Operating EBITDA was up 8% YoY to ₹531 crore. 

Key Metrics:

• ROE: 12.1%
• ROCE: 12.4%

5. Mahindra Lifespace Developers Ltd: Incorporated in 1999, Mahindra Lifespace Developers Ltd is engaged in the business of development of real estate, residential facilities, and commercial complexes and, through its subsidiary companies, is involved in various infrastructure projects, including the development of SEZs and Industrial Clusters. The company is focused on driving profitable growth to 8K – 10K Cr sales by 2028 and becoming a leader in customer centricity. During Q1 FY25, gross development value stood at ₹1,400 crore for society development in Sai Baba Nagar, Borivali (5 societies), its third such project in Mumbai.

Key Metrics:

• ROE: 4.66%
• ROCE: 2.01%

Real Estate Sector Outlook

India’s real estate market is anticipated to grow to $5.8 trillion by 2047, accounting for 15.5% of GDP, up from 7.3% currently. India’s physical retail sector is poised for a significant boost, with over 41 million square feet of retail developments expected to open between 2024 and 2028 across the top seven cities, encompassing projects in various phases of construction and planning.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.