Residential unit launches are expected to grow by 15% in FY24: ICRA

November 13, 2023

NEW DELHI: ICRA expects the launches to be at a decadal high (15% year-on-year) of around 680 million sq ft in the financial year 2023-24, on an aggregate basis across the top seven cities supported by decadal low inventory, comfortable years-to-sell (YTS) and healthy demand.

The cities comprise Mumbai, National Capital Region (NCR), Bengaluru, Hyderabad, Pune, Kolkata and Chennai.

The inventory declined to 910 million sq ft as of June 2023 from 946 million sq ft as of March 2022 and the YTS (calculated as unsold inventory/sales in the last 12 months) is low backed by healthy sales and calibrated launches.

The launches in Q1 FY24 were at 131 million sq ft, similar to Q1 FY23, on an aggregate basis across the top seven cities.

Anupama Reddy, vice president and co-group head, Corporate Ratings, ICRA, said, “ICRA expects the sales to increase by 9-11%. The net debt levels may increase by around 20% in FY24, given the increased land acquisition for new business development by developers in addition to the increase in construction finance debt due to a ramp-up in project execution. Nonetheless, the leverage, as measured by net debt/cash flow from operations, is expected to remain comfortable between 1.1 times and 1.3 times in FY2024, supported by healthy cash flows.”

ICRA expects the area sold in the top seven cities in India to increase by 8-9% to 650 million sq ft in FY24 on a high base of FY23.

Area sold in the top seven cities in Q1 FY24 increased 22% year-on-year, while it moderated 8% quarter-on-quarter sequentially and reached 158 million sq ft. In FY23, the residential sales have seen healthy growth of 34% year-onyear backed by strong consumer sentiment, healthy and pent-up demand.

The replacement ratio is estimated to inch to slightly above one time in FY24, compared to 0.98 in FY23.

The average sale price (ASP) rose by 11% in FY23 year-on-year basis and is expected to further increase by 4-6% in FY24. This is driven by a change in the product mix with a higher share of luxury units and pricing flexibility arising out of healthy sales and the resultant lower inventory overhang.

  • Published On Nov 13, 2023 at 03:31 PM IST

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