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Informist, Wednesday, Dec. 11, 2024

MUMBAI – HSBC Global Research expects major launches in the Indian residential market in Jan-Mar to help developers to meet their pre-sales guidance for 2024-25 (Apr-Mar). The research firm expects residential demand to grow in 2025, but a high pre-sales base is expected to impact the sales momentum, it said in a report.

The weak pre-sales in the first half of FY25 were driven by fewer launches because of approval-related issues due to the general elections. Launches in this period were only 28% of the launch guidance for FY25. HSBC Global Research expects the issues to get resolved in Jan-Mar and expect launches to pick up. If the approval cycle remains weak, companies may need to cut their pre-sales growth guidance for FY26 to high-single to low-double digits. Investors are still focussed on pre-sales and any slowness could impact stock performance of real estate companies, the research firm said. Moreover, real estate stocks are seen to benefit from interest rate cuts expected in 2025, the research firm said.

Investments in building product offerings are required as strong sales in the past two years have led to limited inventory available with developers to keep pre-sales momentum without new launches. Developers need to acquire land and seek joint ventures with landowners who can quickly turn around approvals in order to shore up their product offerings, the report said. However, this is not seen as putting pressure on prices.

HSBC Global Research said market affordability remains comfortable as higher realisations are yet to curtail apartment sizes. However, over the years, residential demand is expected to shift to mid-income levels, impacting sales and margins of developers. The research firm advises developers to focus more on mid-income housing as luxury housing has hit a high base. However, the report also mentioned that the growth in the prices and sizes of properties suggests a shift towards premium and luxury housing. HSBC Global Research has retained its 'buy' rating on Godrej Properties Ltd., DLF Ltd., and Sobha Ltd., and a 'hold' rating on Oberoi Realty Ltd.  End

Reported by Arya S. Biju

Edited by Ashish Shirke

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