Record Presales in Q2, New Launches to Fuel Momentum in Q3

In terms of micro markets, the top six cities are projected to continue to consolidate, with Bengaluru, MMR, and Pune experiencing significant volume-driven growth, while NCR's growth will mostly be fueled by stronger price appreciation in the luxury category.

According to a report by HDFC Securities, real estate developers are reporting record presales in what would otherwise be the seasonally weakest quarter. This trend is anticipated to continue in the next quarter as fresh launches multiply the presales. "Within micro-markets, we estimate that the trend towards consolidation will continue in the top six cities, with Bengaluru, MMR, and Pune witnessing strong volume-driven growth, while NCR growth will mostly be fueled by price rises.

Driven by higher price appreciation in the luxury segment," analysts at HDFC Securities said while announcing that geographical diversification is likely to continue with growth in presales from the non-core market. It also stated that the increase in launches and more supply would maintain a stable average price realization. 

Affordable and middle-income housing could be negatively impacted by a higher mortgage rate, but the demand for luxury homes is unlikely to change because the luxury market is driven by the wealth effect. There is a greater lean toward premium projects as evidenced by the most recent GDV addition by developers like Prestige, Godrej, and Microtech."We are seeing higher presales growth from the premium real estate segment, which is resulting in higher average price realization for developers," the research continued for the NCR and Bengaluru regions.

According to HDFC Securities research, significant IT businesses have ordered their employees to get back to work; therefore, by March 2024, physical occupancy is anticipated to rise from 45?50% to 70%. Since COVID, these organizations have had a turnover rate, and a sizable portion of the workforce is currently made up of freshmen.

Working together and learning are both necessary. According to the analysis, the rise in physical occupancy will prompt quicker lease termination decisions and a hardening of office rental rates.

In terms of malls, HDFC Securities anticipates that as individuals look for other ways to spend money?such as on hospitality, travel, etc.?consumption weariness will become more pronounced. Growth will be fueled by the impending holiday season before it slows down towards the end of 2HFY24.

We observed intensified business development initiatives from leading developers in FY23. Godrej exceeded their prediction of Rs 150 billion by adding GDV in the amount of Rs 320 billion in FY23. Macrotech increased GDV in FY23 by Rs 198 billion, exceeding the BD forecast of Rs 150 billion. With a significant GDV addition of Rs 143 billion by Macrotech during H1FY24 (or 80% of the FY24 forecast), we have observed positive BD activity. We anticipate our coverage universe to add a new land bank during FY24, according to HDFC Securities. Organized firms are better positioned to add new BD and increase market share due to their solid balance sheets, low cost of capital, and strong brands.