Home Sales Likely To Grow At 8-10% This Fiscal: Report

Residential real estate developers across the top six cities are expected to clock 8-10 per cent sales growth this fiscal despite rising interest rates and home prices last financial year, according to a report.

Continuing strong collections and lower debt levels will strengthen developers’ credit profiles too, Crisil Ratings said in a report on Wednesday.

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Buoyant residential demand across the mid, premium and luxury segments led to robust sales in the past two fiscals. This helped strengthen the leverage and credit profiles of realtors and the same should sustain over the medium term, said the report based on 11 large and listed and 76 small and mid-sized residential developers accounting for 35 per cent of sales.

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According to Aniket Dani, a director of the agency, demand for residential real estate is rising because of healthy economic growth and offices continuing with a hybrid working model, especially for bigger and premium residences.

This demand is expected to hold firm at 8-10 per cent despite a rise in interest rates and capital value for the aforesaid reasons, and the demand momentum is expected to continue on the back of inventory being at comfortable levels of around three years of sales on an average against 4.5 years before the pandemic.

Sales by the 11 large and listed realtors in the sample set rose 50 per cent year-on-year last fiscal in value, while the area sold rose 20 per cent. The higher realisation (Rs/sqft) for these developers reflects the preference for bigger and premium homes, as per the report.   These large developers are well poised to increase their market share to 30 per cent this fiscal from 16-17 per cent in fiscal 2020, driven by strong sales and collections from ongoing projects, easier access to bank finance and capital markets, and increasing consumer preference towards reliable and reputed brands.

The cities mapped are Mumbai Metropolitan Region, Delhi-NCR, Bengaluru, Pune, Kolkata, and Hyderabad. The 11 large and listed realtors are Brigade Enterprises, DLF, Godrej Properties, Kolte-Patil Developers, Macrotech Developers, Mahindra Lifespace Developers, Oberoi Realty, Prestige Estates, Puravankara, Sobha and Sunteck Realty.