Residential unit launches are projected to experience a 15% growth in the fiscal year 2023-24, according to ICRA. The unsold inventory decreased from 946 million sq ft in March 2022 to 910 million sq ft in June 2023, contributing to a low years-to-sell (YTS) ratio, supported by robust sales and strategic launch planning, as per ICRA’s data.
ICRA anticipates a decade-high launch of approximately 680 million sq ft across the top seven cities during FY24. These cities include Mumbai, National Capital Region (NCR), Bengaluru, Hyderabad, Pune, Kolkata, and Chennai. The inventory reduction, coupled with a favorable YTS, is expected to drive this growth, fueled by sustained demand.
In the first quarter of FY24, launches totaled 131 million sq ft, mirroring Q1 FY23 figures across the top seven cities. Anupama Reddy, Vice President and Co-group Head of Corporate Ratings at ICRA, commented, “ICRA forecasts a 9-11% increase in sales. Despite a potential 20% rise in net debt levels in FY24 due to expanded land acquisition and construction finance debt, leverage is expected to stay comfortable between 1.1 and 1.3 times, supported by healthy cash flows.”
ICRA predicts an 8-9% rise in the area sold in the top seven cities in India, reaching 650 million sq ft in FY24, building on the strong FY23 base. The first quarter of FY24 saw a 22% YoY increase in the area sold, though it moderated 8% sequentially to 158 million sq ft. FY23 witnessed a 34% YoY growth in residential sales, driven by positive consumer sentiment and pent-up demand, with the replacement ratio expected to slightly exceed one time in FY24 compared to 0.98 in FY23.
The average sale price (ASP) exhibited an 11% YoY increase in FY23 and is projected to further rise by 4-6% in FY24. This uptrend is attributed to a shift in the product mix, featuring a higher proportion of luxury units, and pricing flexibility resulting from strong sales and reduced inventory overhang.