The Impact of Elections On Real Estate

Waseem Ahmad / 14 Mar 2014

The Impact of Elections On Real Estate

The real estate sector has always succeeded in drawing the attention of investors. Whenever it is an election year, the stocks in the sector seem to witness some appreciation. In this article we analyse how these stocks have performed on the bourses in the pre and post election period. We have taken in consideration the last general election year of 2009. Let us take a look at the performance and get a grab on whether this is an opportunity to earn some short- term profits or not.

The real estate sector has always succeeded in drawing the attention of investors. Whenever it is an election year, the stocks in the sector seem to witness some appreciation. In this article we analyse how these stocks have performed on the bourses in the pre and post election period. We have taken in consideration the last general election year of 2009. Let us take a look at the performance and get a grab on whether this is an opportunity to earn some short- term profits or not.

For comparison we have taken the leading real estate companies and their stock prices on the date of the announcement of the election schedule, on start of polling date and on the day when the new government was formed. We have considered S&P BSE Realty index also for the analysis. 

Pre Election 2009


Post Election 2009

Company NameStock Price(A) Schedule announcement Date 2 Mar, 2009'Stock Price(B) Polling Start Date 16 Apr 2009' Return % (A-B)Stock Price(C) Date of Goverment Formed 19 May 2009' Return% (B-C)Total Return % (A-C)
DLF 149 234.65 57.5 384.7 63.9 158.2
Sobha Devloper 79.05 97.7 23.6 149.15 52.7 88.7
HDIL 71.75 124.4 73.4 285.55 129.5 298.0
Indiabulls Real 89.55 135.65 51.5 199.75 47.3 123.1
S&P BSE REALTY 1379.84 2100.74 52.2 3348.76 59.4 142.7


From the pre-election to post-election period, HDIL had performed exceptionally well among all the leading realty players and gave a retun of 297% in less than three months. DLF,  which is having approximately 50% weightage in S&P Realty index, was the second best performer after HDIL and had given a retun of 158% during the period. 


Sobha Developers and Indiabulls were not exception to this and they had also shown high returns  during the period . Indiabulls stood third with a return of 123% in pre-election to post- election period. Sobha Developers which is well known for its luxury products had given a return of 88% for the same period. S&P BSE Realty benchmark index had given a return of 142%.


Since the announcement of the election schedule to the polling date, HDIL had recorded 73% of growth and from polling date to the date of the formation of the new government, it further increased by129%. DLF and Sobha Developers also maintained the same trend and recorded lower growth in the first phase(A-B) of 57% , 23% respectively and after that it had witnessed higher growth of 64% and 52% respectively till new government came to power. 


Indiabulls had recorded higher growth of 51% in first phase (A-B) but failed to maintain the growth in the second phase (B-C) and come down to 47%. We considered since announcement of election schedule to polling start date as phase (A-B) and polling date to new government formation date as phase (B-C).


Here we are again in a similar situation when the general election is knocking at the door and most of the real estate companies are quoting even below of what they were quoting during the pre-election of 2009, while S&P BSE Realty index is 1963 points below from post-election 2009 level. Here is a trend of the companies before pre-election 2014.


Pre Election 2014
Company NameSchedule announcement DateStock Price(A)Till Date Stock Price(B)Change % (A-B)
DLF 5 Mar' 2014 144.75 14 Mar' 2014 168.5 16.41
Sobha Developers 5 Mar' 2014 314.9 14 Mar' 2014 355 12.73
indiabulls Real Estate 5 Mar' 2014 49.3 14 Mar' 2014 52 5.48
HDIL 5 Mar' 2014 42.25 14 Mar' 2014 48.4 14.56
S&P BSE REALTY 5 Mar' 2014 1239.23 14 Mar' 2014 1385 11.76


Once again the stocks are showing a similar kind of movement since the announcement of the general election 2014. DLF has recorded a 16% growth in the last 10 days, which is highest amongst these companies, while (general election 2009) the best performer of last time, HDIL, has come down to second position with a growth of 14% during the period. Sobha developers and Indiabulls Real Estate has gone up to 12% and 5% respectively. This time till now, all the leading players execpt Indiabulls have recorded higher growth than S&P BSE Realty index. Seeing the current market sentiment one can think of investing in the companies.