India’s large listed residential real estate developers will clock sales growth of over 25% on-year this fiscal, says a new report by CRISIL Ratings. The analysis, which includes 11 large listed residential developers in the country, also adds that developers will see sales growth of 10-15% on that high base next fiscal (FY24).
Realtors in the sample set reported sales of over Rs 31,000 crore in the first half of this fiscal — equal to their entire fiscal 2020 haul — and they are expected to close this fiscal at over Rs 65,000 crore this fiscal, up a whopping 110% compared with the pre-pandemic level.
This is despite a moderation of up to 15% in affordability since the second half of last fiscal as capital values and interest rates have increased, stamp duty has been reinstated in some places, and inflationary pressures continue, the report adds.
The ratings agency expects property prices to rise 6-10% this fiscal and a further 3-5% in the next across the top six cities because of a steep increase in raw material, labour and land costs and relatively favourable demand-supply dynamics.
“This, however, has not impacted demand for residences adversely, given a strong preference for larger homes as the hybrid working model continues in many sectors,” the repot says.
“Large developers generally have a good track record of timely and quality delivery, which is why they are preferred by customers. Large realtors in our sample set will likely account for 40-45% of new launches this fiscal versus less than 30% before the pandemic This will mean an increase in their market share to 24% this fiscal and 25% by fiscal 2024, compared with 14% before the pandemic,” said Gautam Shahi, director, CRISIL Ratings.
Inventory levels in the top six cities have corrected to a comfortable 2.5 years on average, as against 4 years before the pandemic because of fewer launches in the past two years and faster sales momentum. Although new launches are catching up, healthy demand will keep the inventory levels in check over the next 2-3 years at 2.5-2.75 years.
The composition of inventory has changed in the wake of the pandemic. Luxury inventory, or homes priced above Rs 1.5 crore, now comprise 40-45% in value versus 25-30% before the pandemic, while the share of affordable homes, priced below Rs 40 lakh, has declined to 10% from 30%.
“This, too, has benefitted large developers, which have a smaller share of affordable homes. While launches in the affordable segment are expected to pick up, the mid-to-premium segment will dominate over the medium term,” it said.
Cities included in the analysis are Mumbai Metropolitan Region, National Capital Region, Bengaluru, Pune, Hyderabad and Kolkata. The 11 large and listed realtors in sample set include Brigade Enterprises, DLF, Godrej Properties, Kolte-Patil Developers, Macrotech Developers, Mahindra Lifespace Developers, Oberoi Realty, Prestige Estates Projects, Puravankara, Sobha and Sunteck Realty.
