It said the sharp slowdown in demand for both residential and commercial property was starting to have an impact on prices.
Bruce Rolph, who wrote the report, said: “Recent top-down data points suggest further worsening of the slowdown for residential and commercial property demand in India.”
It blamed rising interest rates for hitting both demand for property – down 39% on the previous year for residential in major cities and 38% for commercial – and the cost of borrowing for developers.
“As such, we prefer developers with healthier balance sheets and cash flows, transparent NAV and land bank and better execution track record. Sobha Developers, Phoenix Mills and Prestige Estates are our top picks, while we remain sellers of DLF,” he said.
Meanwhile, Citi also questioned whether US Reits might see a reversal of fortune in 2014.
US Reits analyst Michael Bilerman said some might be "overcooked” while others needed to "spend some more time in the oven”.
He said while some Reits might pick up from their underperformance seen this year, valuations alone would not be the only factor to consider.
While Citi found Reit stocks had been largely flat during 2013, with the 3% total return just coming from dividends, over 30 stocks had produced a negative return.
The sector had witnessed a wide dispersion of returns since 2000, with a historical spread between the top and bottom 25% of total returns being 51 percentage points on a simple average basis.
“Stock selection matters despite being in a sector that most deem highly correlated and [one that] trades as a group,” Rolph explained.
