FY25 gears-up to record robust growth in Real estate than FY24:JM Financial

In the upcoming financial year 2025, the growth of the residential real estate market will be upward. According to the report of JM Financial, the domestic residential market performed very well in FY24.

According to the estimated report of FY25, the market will be pumped up by 18%, with 12% coming from an increase in the number of units sold and 6 per cent due to higher prices.  Moreover the report said, it expects that the supply will grow moderately, matching the demand for new purchases throughout the year.

The domestic residential market saw outstanding performance in FY24, achieving its highest-ever absorption rate. Pan-India absorption increased by around 20.1% year-on-year (in terms of area absorbed), while supply grew by approximately 11.5% year-on-year. As a result, inventory levels in cities dropped to a record low of 12 months.

In FY24, the residential real estate sector saw an average year-on-year price increase of 9.0%, reflecting overall market growth of 29%. The report also highlights that pre-sales for listed companies rose by 39.5% year-on-year, indicating continued market share gains for listed and Tier 1 developers.

“With historically low inventory levels, rising disposable income, and limited supply expansion, the residential real estate sector is poised to maintain its upward trend,” the report noted.

In its outlook report, JM Financial mentioned, “While supply is expected to grow steadily going forward, we expect inventory levels to be maintained at healthy levels on the back of robust absorption, given the buoyant demand scenario. Additionally, while cash flows are anticipated to grow substantially, developers are likely to prioritise business development over deleveraging.”

The FY24 witnessed the highest sale in residential real estate with pan-India sales crossing a billion square feet mark.

Observing an ushering trend, the report added that real estate companies have started diversifying into new micro markets to reduce dependence on core regions and capture growth opportunities.

With greater preference for branded and high-end products, Tier 1/listed developers are aiming to gain market share from the fragmented/informal segment of the industry, the report added.

Citing the data from Propequity it stated that the industry has seen Tier 1 developers gaining market share from the informal segment. The top 10 publicly listed developers have increased their market share by around 8 percentage points since 2019.

The report also noted that a growing trend of real estate companies diversifying into new micro markets to reduce reliance on core regions and capitalize on growth opportunities. Tier 1 and the listed developers are targeting increased market share by focusing on branded, high-end products, overtaking the fragmented informal sector.

Highlighting the Propequity data, the report highlighted that the top 10 publicly listed developers have grown their market share by about 8% points since 2019. In tier 1 cities the demand for luxury real estate is growing sharply since FY22. Post pandemic there is a growing demand in spacious and well equipped residences having ergonomic facilities with sound security management.