What are the signs we are seeing reaching the peak?
The homogeneity of sales and price growth in top cities is weakening after the pandemic. HSBC Securities said in its February 27 report that although the National Capital Region (NCR) performed better than other countries, the deterioration in Hyderabad was obvious, with the number of units sold and the number of value declined, and project starts declined for four consecutive quarters. Even Bengaluru is slowing, with units selling down three quarters despite the growth in launches. The average apartment size in some cities peaks. Hyderabad, Bengaluru and Ahmedabad show modest growth in apartment size.
What does this mean for the industry?
House sales are driven by the demand for upgrading, and the demand for upgrading is driven by the wealth impact generated by the stock market. However, signs of peaks may be cautious while projects increase and slower price growth. Over the past four years, strong sales have ensured that customers should pay enough collections for developers to use on construction. But the developers will see moderation during the active expansion phase. Inventory is far from worrying as far as unsold units have been months old. Absolute inventory levels in Bengaluru, Chennai and NCR are beginning to rise.
How is the Realty Index performing this year?
After 2024, real estate stocks have been booked for profits. The Nifty Realty index has fallen 21% this year, while the Nifty 50 has fallen 7%. On a three-month basis, no single stock in the real estate index has brought positive returns. During the December quarter, developers’ rollouts and mixed performance delays did not inspire confidence.
Should the listed developers be worried?
There is little reason why top real estate developers are scary. Most of them reached about 70% of pre-sale guidance in the first four quarters of FY25, and the current January-March deadline is usually strong for the industry. Some developers like Prestige Group lag behind releases and guidance, but that’s a problem with the entire department. Although this provides a buffer, further delays in launching cost them pre-sales due to almost no inventory to sell.
Will the Q4 rescue 25 perform?
Although the resident cycle has reached its peak, it is still stable. After the launch of the project in the previous quarters, it is expected to see a record release led by large developers in the fourth quarter. The speed of launch will increase sales. Most of the listed developers are relying heavily on this quarter’s launch to meet their fiscal 25 sales targets. However, analysts believe that sales trends are expected to decline gradually, and price growth is moderate.
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