India's Home Sales To Grow At 10% In FY24, Says Crisil
Continued strong collections and lower debt will strengthen developers’ credit profiles, CRISIL said.
Housing sales across the top six cities of India may grow by 8–10% this fiscal amid a rise in interest rates and home prices in the last fiscal, according to Crisil Ratings Information Services of India Ltd.
The growth will be supported by 4-6% volume growth and a 3-5% increase in capital values, the ratings agency said in a report on Wednesday.
"Buoyant residential demand across the mid, premium, and luxury segments had resulted in robust sales growth in the past two fiscals. The leverage and credit profiles of real estate developers had strengthened, too, and should sustain over the medium term."
The top six cities include the Mumbai Metropolitan Region, the National Capital Region, Bengaluru, Pune, Kolkata, and Hyderabad.
The sales from 11 large and listed real estate developers rose 50% year-on-year in value terms, while the area sold increased around 20%, Crisil said.
These developers are Brigade Enterprises Ltd., DLF Ltd., Godrej Properties Ltd., Kolte-Patil Developers Ltd., Macrotech Developers Ltd., Mahindra Lifespace Developers Ltd., Oberoi Realty Ltd., Prestige Estates Projects Ltd., Puravankara Ltd., Sobha Ltd., and Sunteck Realty Ltd.
The higher realisation—rupee per square foot—for these developers reflects the preference for bigger and premium homes, Crisil said.
"Large developers are well poised to increase their market share to around 30% this fiscal from 16–17% in fiscal 2020, enabled by continued strong sales and collections from their ongoing projects, easier access to bank finance and capital markets, and increasing consumer preference towards reputed brands," the rating agency said.
Momentum To Continue
"The demand momentum is expected to continue on the back of inventory being at comfortable levels of around three years of sales on average, as opposed to more than 4.5 years before the pandemic. Developers are on a stronger footing with new launches getting absorbed in line with incremental demand," said Aniket Dani, director, Crisil Market Intelligence & Analytics.
The credit metrics of small and mid-sized developers have improved too, with the debt-to-total assets ratio expected to be 45–47% by March 2024, as against 54% before the pandemic, the report said.
"However, these players rely more on debt and may need to tie up with larger developers for new launches to benefit from the latter’s superior execution ability, strong balance sheets, and reputation of quality consistent with the brand image," said Crisil.
That said, sustenance of growth amid rising interest rates and related affordability challenges will remain key monitorables, it said.
