Q1 results preview: Real estate sector likely to post healthy growth in bookings, says MOSL; lists top picks
The real estate market in India has seen significant growth in recent years, driven by urbanization, increasing middle-class incomes, foreign investments, and government support. This has led to a surge in demand, especially for mid-range and premium housing options.
With the rise in urbanization and incomes, there is a growing preference for premium residential properties that offer prime locations, superior amenities, holistic living experiences, a community of like-minded individuals, and modern comforts.
Developers in key cities like Mumbai, Bengaluru, Gurugram, NCR, and Pune have been witnessing strong demand for their projects, with many selling out within hours of booking openings. Listed real estate companies ended FY24 on a high note, with a 26% year-over-year growth in pre-sales in 4QFY24.
Despite a higher base of bookings, real estate players believe that demand will continue to be strong in the near future. Factors like continuous wage growth, rising economic activity, and abundant mortgage options have contributed to sustained residential demand and strong office space leasing.
The Indian real estate market is currently valued at around ₹39,80,534 crore, contributing 7.3% of the total economic output. Industry estimates project that by 2047, this market will expand to ₹4,84,01,000 crore, contributing 15.5% to the total economic output.
Domestic brokerage firm Motilal Oswal anticipates a strong demand traction to continue, with a 79% year-over-year increase in pre-sales in 1QFY25. The firm expects companies like Godrej Properties, Mahindra Lifespace Developers, DLF, and Oberoi Realty to report a significant surge in bookings.
Overall, the brokerage maintains a positive outlook for the real estate sector, citing a favorable demand-supply balance, comfortable inventory levels, healthy pricing power, and opportunities for market consolidation. They have issued a ‘buy’ rating for companies like LODHA, Godrej Properties, Prestige Estates Projects, Brigade Enterprises, and SOBHA.
It’s important to note that the views and recommendations mentioned in this article are those of individual analysts and do not represent the views of Mint. Investors are advised to consult with certified experts before making any investment decisions.