NEW DELHI: India Ratings and Research (Ind-Ra) has maintained a neutral outlook for the residential real estate sector for FY25. Absorption and prices are likely to be supported by affordability and stability of interest rates.
The residential sales registered 25% growth year-on-year for the top eight cities in in 9M FY24, despite price increases and sticky interest-rates.
“With most regions witnessing a surge in prices, Ind-Ra expects the pre-sales growth to moderate to 8% to 10% yoy in FY25. Inventory levels have also risen over FY24 in the premium and luxury segment, as launches increased encouraged by the sharp rise in sales and realisations,” said Mahaveer Shankarlal Jain, director (Corporate Ratings), Ind-Ra.
With most of the old-stock cleared and existing inventory largely liquidated along with a continued pick-up in demand and spike in commodity prices due to geopolitical tensions, prices surged by almost 14% year-on-year in FY23 along with an increase in land prices and rental yields.
Ind-Ra expects the prices to have been higher at about 22% year-on-year at FY24-end and would be subdued at around 5% year-on-year for FY25.
The company expects the mid-income and upper mid-income segments to continue to witness a strong buyer interest. While the premium and luxury segments witnessed sharp demand growth in 9MFY24, Ind-Ra expects them to cool down due to the high base as the unsold inventory levels remain elevated and are the highest over the past five years.
With prices expected to further increase over FY25, albeit moderately, affordability levels are likely to remain challenging, leading to deferment in purchases.
