Residential Real Estate Expected to Grow By 8-10% In 2023-24

Residential real estate sales are expected to grow 8 to 10 per cent across top cities in India in the 2023 – 24 fiscal year, despite the rise in interest rates and asset prices, according to a report by Crisil Ratings. Demand for residential property has seen an increase in the mid, premium, and luxury segments in the past two financial years, leading to robust sales growth in the segment.

Sales by the 11 big real estate developers have risen 50 per cent year on year in FY23 in value terms, and the area sold has increased by nearly 20 per cent, according to the report. The higher realisation (Rs per square foot) for these developers shows the emerging preference for bigger and premium homes by buyers and investors. CRISIL adds that the sales of small and mid-sized developers have also seen an increase in sales in the last 2 financial years.

Large developers are expected to see an increase in market share to around 30 per cent in this financial year, from 16-17 per cent in FY 2020. This has been enabled by continued strong sales and collections from ongoing projects, as well as easier access to bank finance and capital markets. Home buyers and investors are also showing an increasing preference for reliable and reputed developers.

Residential real estate developers across the top six cities are expected to see an 8-10 per cent sales growth this fiscal year, despite an increase in interest rates and home prices. Leverage and credit profiles of real estate developers have improved as well and this should sustain them over the medium term, as per the report.

The rise in sales in residential properties can be attributed to healthy economic growth as well as the hybrid working model adopted by offices post-COVID. The demand for residential real estate has remained steady this fiscal year with buyers preferring bigger and premium homes with more space as they continue working in a hybrid model.