The shares of real estate companies have seen sharp upswings and downswings recently, but analysts remain bullish on the stocks while listing key things to watch out for.The Nifty Realty index has overall declined more than 2% in the past one month, closing at 907.95 on Thursday. Brigade Enterprises shares rallied 7%, while Aditya Birla Real Estate, Sobha, Lodha, DLF and other stocks gained up to 4%.Residential real estate companies had a weak Q1 earnings season, impacted by subdued launches and a high base, said Pankaj Kumar, VP of Fundamental Research at Kotak Securities. He noted that overall residential sales value for the industry grew 9% YoY in Q1 FY27, supported by 6% YoY pricing growth and 3% YoY volume growth.Industry volumes have remained range-bound for three years, with growth increasingly driven by price appreciation rather than volumes. Inventory has risen modestly but remains manageable at 1.9 years of trailing sales, he further said, noting that the range-bound volumes for three years in a row came even as larger developers continued to gain market share through geographical diversification and stronger execution.What lies ahead for real estate stocks?A sustained recovery in volumes would further validate the underlying strength of residential demand. We have witnessed improved stock performance in the past three months despite mixed sales performance, on the back of inexpensive valuations and healthy balance sheets. Planned launches of Rs 2 lakh crore in FY27 are expected to support the 17% pre-sales growth guidance for our coverage universe, Pankaj Kumar said, adding that Kotak Securities prefers Lodha, DLF and Sobha shares in the real estate sector.Ambit Capital in a report meanwhile noted that REITs are seeing an uptrend in leasing momentum. GCC-led demand remained a key demand anchor across our coverage, though the pace varied meaningfully, it said. The brokerage has a Buy call on the shares of Embassy Office Parks REIT, Mindspace Business Parks REIT and Brookfield India REIT.In another report, Ambit highlighted that organised flex-workspace operators continued their outperformance, with overall revenue rising 34% YoY in Q1. It has a Buy rating on the shares of WeWork India, Smartworks, IndiQube and Awfis.Also read | Explained: How a JP Morgan unit and a Mumbai-based stock broking firm allegedly manipulated Sensex during CAS(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)