Morgan Stanley Sees Opportunity in Real Estate: DLF and Prestige Estates Highlighted
Despite recent underperformance, global brokerage firm Morgan Stanley believes the real estate market reset presents a reasonable entry point for select stocks. DLF and Prestige Estates are among the top picks, while Godrej Properties is downgraded.
Real EstateDlfPrestige EstatesGodrej PropertiesMorgan StanleyReal Estate NewsMay 29, 2025
Global brokerage firm Morgan Stanley believes this market reset presents a reasonable entry point for select real estate stocks. Despite recent underperformance, the brokerage maintains a positive long-term outlook, with sector fundamentals remaining intact.
Realty Stock Ratings and Targets
DLF : Morgan Stanley has upgraded DLF's rating from 'Equal-weight' to 'Overweight' on attractive valuation. The brokerage has revised its price target lower to ₹900 from ₹910 earlier. The foreign brokerage sees value in DLF due to its strong brand, extensive land bank, and net cash position, which provide margin protection and model sustainability. The brokerage forecasts a 13% compound annual growth rate (CAGR) in investment property revenue between FY24 and FY28.
Prestige Estates Projects : Rating upgraded from 'Equal-weight' to 'Overweight', and price target has also been increased to ₹1,700 from ₹1,370 earlier. Prestige may see a robust recovery in pre-sales in FY26, growing 40% year-on-year, the strongest among peers. The company's leverage is now more manageable following its qualified institutional placement (QIP) and the potential listing of its hotel assets.
Godrej Properties : Rating downgraded from 'Overweight' to 'Equal-weight', and price target has been lowered from ₹3,400 to ₹2,400. While growth prospects are expected to stay strong in FY26, Morgan Stanley warns this may come at the cost of margins and increased leverage if the company overspends on business development.
Oberoi Realty : The price target has been revised lower to ₹1,700 from ₹2,060 earlier.
Macrotech Developers : Price target has been revised higher to ₹1,400 from ₹1,230 earlier.
According to Morgan Stanley, India's real estate cycle remains intact, though it appears to be in a late stage. The brokerage continues to favour companies with stronger growth trajectories and has updated its NAV calculation model. Investors remain focused on growth and are likely to respond positively to pre-sales surprises. The top five listed developers are expected to post 15% year-on-year growth in pre-sales (compared to 18% in FY25 and 39% in FY24). Among these, Prestige Estates stands out with an expected 40% growth in FY26.
In summary, Morgan Stanley's strategic upgrade of DLF and Prestige Estates, coupled with the downgrade of Godrej Properties, reflects a nuanced approach to the current market conditions. While the real estate sector faces challenges, the brokerage sees significant opportunities for investors willing to capitalize on the market reset.
Frequently Asked Questions
Why did Morgan Stanley upgrade DLF's rating?
Morgan Stanley upgraded DLF's rating from 'Equal-weight' to 'Overweight' due to its attractive valuation, strong brand, extensive land bank, and net cash position, which provide margin protection and model sustainability.
What is the forecasted growth in investment property revenue for DLF?
Morgan Stanley forecasts a 13% compound annual growth rate (CAGR) in investment property revenue for DLF between FY24 and FY28.
Why was Godrej Properties downgraded by Morgan Stanley?
Morgan Stanley downgraded Godrej Properties from 'Overweight' to 'Equal-weight' due to concerns about potential margin pressure and increased leverage if the company overspends on business development.
What is the expected pre-sales growth for Prestige Estates in FY26?
Prestige Estates is expected to see a robust recovery in pre-sales in FY26, growing 40% year-on-year, which is the strongest among peers.
How has the real estate sector performed compared to the Sensex over the past 12 months?
The real estate sector has corrected by 8% over the past 12 months, underperforming the Sensex, which gained 9% during the same period.
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