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.
Related News Articles
Boosting India's Economy: What the Real Estate Sector Expects from the New Government
With a new government in power, the real estate sector is hopeful for positive reforms that will drive growth and development.
Delta Corp Approves Demerger, Creating New Hospitality and Real Estate Entity
Delta Corp has announced the demerger of its hospitality and real estate divisions, resulting in the formation of a new entity, Delta Penland Private Limited (DPPL). This strategic move aims to streamline operations and unlock shareholder value.
MahaRERA Successfully Recovers Rs 200 Crore for Compensation
In a significant achievement, MahaRERA has managed to recover Rs 200 crore as compensation. The authority has issued 1163 warrants to recover Rs 705.62 crore from 442 projects.
Pune: Experts Emphasize Design-Centric Urban Planning at VK Group Event
At a recent event organized by VK Group, experts in urban planning and real estate development gathered in Pune to discuss the importance of design-centric urban planning for the future of the city.
CCI Approves Ambuja Cements' Acquisition of Orient Cement: A Strategic Move in the Real Estate Sector
The Competition Commission of India (CCI) has approved Ambuja Cements' acquisition of Orient Cement, signaling a significant shift in the real estate and cement industry. This move is expected to consolidate Ambuja Cements' market position and enhance its
Mumbai Metro Line 14: A Leap Forward in Urban Connectivity
Mumbai's urban landscape is set to transform with the construction of the highly anticipated Metro Line 14, expected to commence within the next year. This new line promises to enhance connectivity and ease the daily commute for millions of residents.