India’s real estate sector continues to defy expectations, achieving unprecedented milestones in FY24, driven by robust demand for residential properties across major cities.
According to a recent report by JM Financial, the surge in demand has propelled the sector to record-breaking absorption levels, with sales surpassing one billion square feet pan-India. The top seven markets have consistently seen pre-sales outpace new launches since FY21, leading to a significant reduction in inventory to just 11 months. JM Financial remains bullish on the sector, projecting a seamless transition of FY24’s stellar performance into FY25. The brokerage anticipates an 18% market growth in FY25, underpinned by a 12% expansion in volume and a 6% rise in prices. Developers have responded to this demand surge with a flurry of new launches, particularly in the luxury segment, where properties are selling out rapidly, sometimes even before the official launch.
The brokerage has expressed a preference for developers with a strong track record in timely project launches and strategic business development. Among its top picks are DLF, Macrotech Developers, and Keystone Realtors, each assigned a ‘buy’ rating. DLF has been given a target price of ₹1,000, implying a 20% upside, while Macrotech Developers and Keystone Realtors have target prices of ₹1,480 and ₹895, representing potential upsides of 16% and 16.5%, respectively. Meanwhile, Oberoi Realty and Sobha received ‘hold’ ratings with target prices of ₹1,820 and ₹1,755, reflecting a more cautious outlook. A notable trend In the market is the diversification of developers into new micro-markets, reducing dependency on core regions and capitalising on emerging opportunities. For instance, DLF is expanding beyond its Gurgaon stronghold into Mumbai, while Prestige Estates and Brigade are broadening their footprints in Hyderabad, Mumbai, and Chennai.
This geographic diversification strategy is expected to sustain growth momentum in the coming years. JM Financial also highlighted two major themes shaping the sector: consolidation and premiumisation. Tier 1 developers are gaining market share by focusing on branded and high-end products, which have become increasingly popular among consumers. The brokerage noted that the top 10 listed developers have collectively gained around 8 percentage points in market share since CY19, underscoring their growing dominance. The rapid sales of high-quality launches have created a scarcity of premium inventory, driving prices upwards. Developers are leveraging this trend by launching new phases of existing projects at higher price points, further enhancing their revenue streams. With robust cash flows, developers are expected to prioritise business development, including outright land acquisitions, over debt reduction, positioning themselves for sustained growth.
