Residential sales in India’s top 7 cities are projected to experience double-digit growth in 2024-25, with the area sold expected to rise by 10-12% to 785-800 million sq. ft, according to ICRA. This growth is based on a strong performance in the 2023-24 financial year. Despite a moderated growth rate, overall sales velocity, collections, and inventory levels are anticipated to remain healthy. The number of new launches is expected to increase by 12% YoY to 767 million sq. ft, supported by historically low inventory, a favourable years-to-sell (YTS) ratio, and robust demand.
As of June, inventory declined to 687 million sq. ft from 732 million sq. ft in March 2023, with a low YTS of 0.9 times, reflecting healthy sales and controlled new launches. ICRA reported a 19% YoY growth in residential sales for FY24, with consistent quarterly peaks, except for traditionally weaker first quarters. Despite a modest 7% growth in area sales during the first quarter of FY25 due to deferred launches, double-digit growth is expected throughout the year, driven by strong end-user demand and manageable affordability. The replacement ratio (launches/sales in the last 12 months) stands at 0.9 times and is projected to remain around 1 time for FY25. Although gross debt for ICRA’s sample set of developers is anticipated to rise by 6-7% in FY25, leverage is expected to stay comfortable, with a debt-to-cash flow from operations ratio of 1.55-1.60 times. The average sale price (ASP) increased by 11% in FY24 and is expected to rise further by 5-6% in FY25, driven by a shift towards luxury units and pricing flexibility. The residential real estate sector outlook remains stable, with developers adapting to new consumer demands for larger spaces and changing preferences.
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