New launches are expected to be at a decadal high of around 680 million square foot (msf) in financial year 2023-24 (FY2024) across India’s top seven cities, says rating agency ICRA. This 15% annual growth will be supported by decadal low inventory, comfortable years-to-sell, a healthy demand and a healthy albeit moderating affordability, says the agency.
“The inventory declined to 910 msf as on June 2023 from 946 msf as on March 2022 and the YTS (calculated as unsold inventory/sales in last 12 months) is low, backed by healthy sales and calibrated launches. The launches in Q1 FY2024 were at 131 msf, similar to Q1 FY2023, on an aggregate basis across the top seven cities, including Mumbai, NCR, Bangalore, Hyderabad, Pune, Kolkata and Chennai,” ICRA said.
Commenting on the outlook for FY2024, Anupama Reddy, vice-president and co-group head, corporate ratings, ICRA, said: “The outlook on the residential real estate sector is stable. Though the sales growth rate is likely to moderate in FY2024 on a high base of FY2023, ICRA expects the overall sales velocity, collections and inventory position to remain healthy. ICRA expects the sales to increase by 9-11% . The net debt levels may increase by around 20% in FY2024, given the increased land acquisition for new business development by developers in addition to the increase in construction finance debt due to a ramp-up in project execution. Nonetheless, the leverage, as measured by net debt/cash flow from operations, is expected to remain comfortable between 1.1 times and 1.3 times in FY2024, supported by healthy cash flows.”
Reddy added: “ICRA expects the area sold in the top seven cities in India to increase by 8-9% to 650 msf in FY2024 on a high base of FY2023. Area sold in the top seven cities in Q1 FY2024 increased 22% YoY, while it moderated 8% QoQ sequentially and reached 158 msf. In FY2023, the residential sales have seen healthy growth of 34% YoY backed by strong consumer sentiment, healthy and pent-up demand. The sales consistently reached new peaks in each successive quarter over the past seven quarters (except Q1 FY2023 and Q1 FY2024; given that first quarters are traditionally laggards) despite an increase in the policy rates translating to higher home loan interest rates and rising property prices. With the launches expected to be at a decadal high in FY2024, the replacement ratio is estimated to inch to slightly above one time in FY2024, compared to 0.98 in FY2023.”
The average sale price (ASP) rose by 11% in FY2023 on a YoY basis. It is expected to further increase by 4-6% in FY2024. This is driven by a change in the product mix with a higher share of luxury units and pricing flexibility arising out of healthy sales and the resultant lower inventory overhang. Given the pandemic-induced desire for larger spaces and changing consumer demand, the developers have accordingly realigned their launches.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at [email protected] |
Housing News Desk is the news desk of leading online real estate portal, Housing.com. Housing News Desk focuses on a variety of topics such as real estate laws, taxes, current news, property trends, home loans, rentals, décor, green homes, home improvement, etc. The main objective of the news desk, is to cover the real estate sector from the perspective of providing information that is useful to the end-user.
Facebook: https://www.facebook.com/housing.com/
Twitter: https://twitter.com/Housing
Email: [email protected]
Related Posts
Real estate continues to be preferred asset class, residential realty outlook cautiously optimistic: Housing.com and NAREDCO survey.
Cement companies to witness lowest operating margins, growth in cement volumes in FY 2023: ICRA report.
H1 FY23 home sales show highest peak in past 10 years: Report.
Homes sold in MMR may expand by 8-9% in FY2024: Report.
Godrej Properties and Godrej Fund Management, to develop commercial project, at Vikhroli, Mumbai.
Future real estate sentiment scores remain optimistic, while office market outlook improves.
