Real estate developers are seen reporting good revenue growth of 30 per cent in the September quarter, on the back of good sales and project completions, while net profit is seen going up around 37 per cent on year.
The major listed real estate players in the sector have all reported good bookings and sales in the quarter, but this does not actually translate into revenue, which is contingent upon completion and delivery of the projects.
Analysts expect good annual growth, with earnings before interest, tax, depreciation, and amortisation seen up 32 per cent on year on an average, though a few like DLF, Sobha Developers and Macrotech Developers may see a dip, with margin contraction.
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HDFC Securities Institutional Research said that on aggregate level, it expected margin to expand y-o-y by 32 basis points. Traditionally, the second quarter of the year is a weak quarter because there are few launches due to the rains. However, this year, due to the patchy rainfall and weeks when there were no rains in some of the ley real estate markets, construction has been ongoing and launches higher than in previous years.
It is expected that many of the projects undertaken in previous quarters and years will finally be completed, leading to higher revenue recognition.
Part of the revenue growth in the quarter under review is expected to be from higher price realisation as developers have seen more sales coming in from the higher-priced premium segments.
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On the commercial real estate side, vacancies have seen a small rise in the September quarter and subdued leasing activity from the technology sector is likely to affect rental income for those that have significant office portfolios, such as DLF and Brigade Enterprises. The quarter also saw demand fall by 14 per cent on year while supply has fallen more at 30 pr cent.
With supply higher than demand and vacancies inching up, there will be pressure on rental growth, analysts said.