NEW DELHI: The residential real estate market is expected to register a strong performance in FY25, where the sales growth will be around 17% year-on-year in terms of area sold (sq ft of area sold) and around 15% in terms of units sold for the eight real estate clusters, according to India Ratings and Research (Ind-Ra).
The rating agency has maintained a neutral outlook for the residential real estate sector for FY26.
Growth in bookings is likely to reduce significantly due to the high base, high prices and a likely slowdown in the luxury segment.
Mahaveer Shankarlal Jain, director, corporate ratings, Ind-Ra said, “Among the top eight cities, the National Capital Region, Bengaluru, and the Mumbai Metropolitan Region are likely to remain relatively resilient in bookings, except for the luxury segment. Developers may continue to experience positive growth in collections and operating cash flows, leading to a sustained strong balance sheet. This is enabled by sector consolidation and delayed launches amid limited unsold stock,”.
Ind-Ra expects property prices to increase 5%-6% year-on-year by end-FY25, then moderate to 3%-4% year-on-year for FY26, due to base effects and new launches.
Prices surged 21% year-on-year in FY24 with old stock cleared and existing inventory largely liquidated.
The government’s focus on infrastructure and connectivity is likely to boost demand in tier II and III cities.
New markets namely Thiruvananthapuram, Guwahati, Bhubaneshwar, and Ranchi are growing rapidly. Outer Mumbai Metropolitan Region (MMR), Surat, Vadodara, Jaipur, Nashik, Chandigarh, and Bhopal, which form over 60% of the market, grew at a 10% CAGR during 2021-2024.
Elevated interest rates and property prices in FY24 and H1 FY25 challenged affordability, reducing demand in the affordable segment.
With price growth expected to moderate in FY26, affordability levels may marginally improve, increasing demand in the affordable segment.
